The Constitution and Post-Judgment Interest

Article XV, Section 1, subdivision 2 provides that "The rate of interest upon a judgment rendered in any court of this State shall be set by the Legislature at not more than 10 percent per annum." And, indeed, the Legislature has set the rate at 10%. However, under the statutory scheme for renewing a judgment, a renewed judgment earns interest at 10% on both the unpaid amount of the underlying judgment and post-judgment interest accrued before the judgment was renewed. In other words, the judgment creditor, in effect, gets compound interest--i.e., interest on the accrued post-judment interest. Does this statutory scheme violate Article XV, Section1? The Court of Appeal has said no, in a decision entitled OCM Principal Opportunities Fund v. CIBC World Markets Corp. (here).

One of the most interesting things about the decision is the deference that the court gave to the Legislature's interpretation of the relevant constitutional provision. This deference stands in sharp contrast to the lack of deference exhibited in the Court of Appeal's decision in Sturgeon, the judicial salaries case. I would be surprised if this decision didn't figure prominently in the petition for review that will undoubtedly be filed in that case, which is due on Nov. 19.