SACRAMENTO, Calif. (Legal Newsline)-A California state senator is calling for the elimination of judicial rules that essentially penalize defendants for appealing civil judgments.

State Sen. Mimi Walters, R-Laguna Niguel, has proposed that defendants who appeal civil verdicts pay market interest rates on judgments rather than the current fixed 10 percent per annum rate.

Pre- and post-judgment interest rates in California have 10 percent per year since 1982. Under Senate Bill 1117, the rate would change to the federal short-term rate, rounded to the nearest whole number percent, plus 2 points.

At least eight states have similar laws on the books. They include: Alaska, Florida, Illinois, Michigan, New Jersey, Ohio, Texas and Washington.

The federal short-term rate is determined from a one-month average of the market yields from marketable obligations of the U.S. government with maturities of 3 years or less. For March, the rate is 0.64 percent.

Backing Senate Bill 1117 is the Civil Justice Association of California, the state's tort reform lobby.

"Although the issue seems obscure, the current process makes defendants think twice about appealing because if they lose the appeal, the amount of money owed to the plaintiffs can jump by as much as 20 percent," CJAC President John Sullivan said. "For example, if the appeal of a $1 million judgment took two years to complete and was unsuccessful, a defendant would owe an additional $200,000."

A similar proposal, outlined in Senate Bill 393, was introduced last year but failed.

From Legal Newsline: Reach staff reporter Chris Rizo at chrisrizo@legalnewsline.com.