Washington State

House of Representatives

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BILL

ANALYSIS

Judiciary Committee

HB 1145

This analysis was prepared by non-partisan legislative staff for the use of legislative members in their deliberations. This analysis is not a part of the legislation nor does it constitute a statement of legislative intent.

Brief Summary of Bill

Amends the definition of "account receivable" for purposes of the six year statute of limitations.
Defines "account receivable" for purposes of the statute governing prejudgment interest, and provides that where a forbearance concerns accounts receivable or goods and services that are not accounts receivable, the obligations are deemed liquidated and, in the absence of an agreement which provides a date on which the moneys become due, specifies when interest begins to accrue.

Background:

Statutes of Limitation.

A plaintiff must commence an action within the statute of limitations (SOL) for that particular type of action or else the action is barred. The SOL for an action upon an "account receivable" is six years. For purposes of this SOL, an "account receivable" is any obligation for payment incurred in the ordinary course of the claimant's business or profession, whether arising from one or more transactions, and whether or not earned by performance.

There are a variety of other statutes of limitation, including:

three years for:
1. an action upon a contract or liability, express or implied, which is not in writing, and does not arise out of any written instrument;
2. waste or trespass upon real property; and
3. an action for taking, detaining, or injuring personal property, including for recovery of the property.
six years for:
1. an action upon a contract in writing, or liability arising out of a written agreement; and
2. the rents and profits or for the use and occupation of real estate.

Prejudgment Interest.

Prejudgment interest is intended to make a plaintiff whole by compensating for the use value of damages incurred from the time of the loss until the date of judgment. A prejudgment award may be made when an amount claimed is liquidated or when the amount of an unliquidated claim is for an amount due upon a specific contract for the payment of money, and the amount due is determinable by computation with reference to a fixed standard contained in the contract, without reliance on opinion or discretion. Conversely, a prejudgment award is not available where the exact amount of the sum to be allowed cannot be definitely fixed from the data or facts proved, but depends upon the opinion or discretion of the trier of fact.

Every loan or forbearance of money, goods, or thing in action bears interest at the rate of 12 percent per year where no different rate is agreed to in writing between the parties. If an agreement in writing between the parties provides for the payment of money at the end of an agreed period of time, or in installments over an agreed period of time, then the agreement constitutes a writing.

Summary of Bill:

Statute of Limitation on an Account Receivable.

For purposes of the six year statute of limitations on an account receivable, the definition of "account receivable" is amended as follows:

"[A]n account receivable is any obligation for payment incurred in the ordinary course of the claimant's business or profession, whether arising from one or more transactions, whether or not earned by performance, whether or not reduced to oral or written contract, and whether or not disputed. "Account receivable" includes, but is not limited to, obligations for medical or other professional services and damage to real or personal property."

(Underlining indicates new language.)

Prejudgment Interest.

For purposes of the prejudgment interest statute, the term "account receivable" has the same meaning as it has for purposes of the six year statute of limitations.

Where a forbearance concerns an account receivable, or goods or services that are not accounts receivable, the obligations are deemed liquidated. In the absence of an agreement which specifies the date on which the moneys become due, interest begins to accrue:

on an account receivable, from the date of the last charge or transaction; or
on goods or services provided that are not accounts receivable, on the payment due date provided in any written invoice, bill, account statement, or other form of writing seeking payment.

The act applies to all accounts receivable and goods and services that are not accounts receivable, whether or not they were in existence before or after the effective date.