California Federal Savings & Loan Ass'n v. City of Los Angeles

In this case, we address a conflict in the Courts of Appeal on a recurring issue of substantial fiscal significance to California public entities: does interest on a judgment against a local public entity accrue at the postjudgment interest rate of 10 percent per annum prescribed by section 685.010, subdivision (a), of title 9 of part 2 of the Code of Civil Procedure, or at the rate of 7 percent per annum, pursuant to article XV, section 1, of the California Constitution?

We conclude that section 970.1, subdivision (b), of division 3.6 of title 1 of the Government Code, which provides that “[a] judgment ... is not enforceable under Title 9,” exempts local public entities from title 9 of the Code of Civil Procedure. Division 3.6 does not, however, itself set a rate of postjudgment interest for claims against the state or local public entities.

Accordingly, pursuant to article XV, section 1, of the California Constitution, “[i]n the absence of the setting of such rate by the Legislature,” the applicable rate of postjudgment interest to be paid by local public entities is 7 percent per annum. The judgment of the Court of Appeal holding otherwise is reversed.

I.

In August…