Authored by Rep. Jeremy Thiesfeldt (R-Fond du Lac) and Sen. Stephen Nass (R-Whitewater), Assembly Bill 95/Senate Bill 76 sought to change the interest rate for pre- and post- judgment interest for verdicts in small claims court. As passed by the Assembly, the legislation would have revised the formula created in 2011 Act 69 (Act 69) to a rate of 8 percent per year. While introduced in March of 2015, the Assembly Committee on Judiciary passed AB 95, 5-4 in January. The Assembly passed the legislation via a voice vote in February, but the Senate did not take up the bill in their final floor session. Therefore, the bill is dead.
Under current Wisconsin law, plaintiffs who win favorable verdicts are usually entitled to recover interest on the monetary judgments awarded to them. There are two types of interest. There is post-judgment interest, which is meant to compensate the plaintiff for loss of the use of the money while a defendant appeals an unfavorable judgment. Post-judgment interest accrues from the time the judgment is made until the time the judgment is paid. There is also pre-judgment interest, which accrues from the time the plaintiff makes an offer of settlement until the settlement is paid, provided the judgment is not less than the offer of settlement.
Prior to 2011, pre- and post- judgment interest rates were set at 12 percent. Because appeals or settlement agreements and payment can take time, plaintiffs could receive a significant windfall due to the high interest rate. 2011 Senate Bill 14 signed into law as 2011 Act 69 changed the interest formula from 12 percent to the prime rate set by the Federal Reserve Board plus one percent. This ensures that plaintiffs do not receive a windfall while also ensuring that defendants pay a reasonable interest rate.