Rodriguez v. Schutt

Justice SCOTT

dissenting:

A nine percent interest rate on nonapp-ealed judgments and a market-determined rate on appealed judgments introduces a variable against which defendant debtors can measure the profitability of appeal. I agree with the majority that this distinction contravenes the General Assembly’s attempt to encourage the prompt payment of judgments and to discourage non-meritorious appeals. See maj. op. at 929. I also agree with the majority that this distinction violates equal protection. Id. at 927. Nonetheless, a distinction between prejudgment interest at nine percent and postjudgment interest at the market rate violates equal protection because, without a rational basis in fact, nonappealed judgment creditors and appealed judgment creditors will receive different rates of interest while they await satisfaction of judgment. Such disparate treatment equal protection was intended to prohibit.

In contrast, allowing the market to determine the interest rate on both appealed and nonappealed judgments furthers the legislative purpose of compensating personal injury victims for the lost time value of their awards and encourages the prompt payment of judgments by eliminating the profitability of appeal. Furthermore, a single market rate of interest eliminates arbitrary distinctions between judgment creditors subject to appeal and judgment creditors who are not.

I

A

Article II, section 25, of the Colorado Constitution and the Fourteenth Amendment of the United States Constitution guarantee the right to equal protection of the laws and assures that persons similarly situated will receive like treatment.1 Estate of Stevenson v. Hollywood Bar, 832 P.2d 718, 723 (Colo.1992); see City of Montrose v. Public Util. Comm’n, 732 P.2d 1181, 1189 (Colo.1987).

The parties do not dispute the appropriate standard which governs our constitutional analysis. Because the interest statute does not involve a fundamental right nor a suspect classification, review is limited to a determination of whether the challenged legislation is rationally related to a legitimate state interest. See Duran v. Industrial Claim Appeals Office, 883 P.2d 477, 482 (Colo.1994). Under that standard, a classification is presumed constitutional and does not violate equal protection unless it is proven, beyond a reasonable doubt, that the classification has no rational basis or is not rationally related to a legitimate governmental purpose. Id. I consider the two prongs of the rational basis test in turn, considering first whether there is “a rational basis in fact for the statutory classification.” Duran, 883 P.2d at 482.

The majority’s construction of the interest statute, with an interest rate distinction between prejudgment interest at nine percent and postjudgment interest at the market rate, violates the first prong of the rational basis test because nonappealed judgment creditors and appealed judgment creditors will receive different rates of interest, and thus are treated differently, while they await satisfaction without a rational basis for the disparate result. A single market-deter*931mined rate of interest, regardless of appeal or the entry of judgment, eliminates the equal protection violation. Diagram A maps the different interest rates resulting from the majority opinion and a single market-determined rate, which avoids constitutional chal-fenge

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B

I now turn to the second inquiry in a rational basis examination: whether the statutory classification bears a reasonable relationship to a legitimate government interest. Duran, 88B P.2d at 484; Western Metal v. Acoustical and Const., 851 P.2d 875, 881 (Colo.1993).

The General Assembly enacted the amendments to section 13-21-101 to discourage non-meritorious appeals and to encourage the prompt payment of judgments. However, a prejudgment-postjudgment distinction creates disparate treatment and thwarts the prompt payment of judgments. Recognizing that the prejudgment-postjudgment distinction violates the rational basis test, the majority writes:

In the usual case, C.A.R. 4 requires that a party seeking appellate review of a final judgment file a notice of appeal with the appellate court within forty-five days of the entry of judgment. We recognize that C.A.R. 4, in combination with the post-judgment interest provisions of section 13-21-101, creates a window of forty-five days within which the parties’ later conduct may affect the rate at which postjudgment interest accrues. That is, a judgment debtor may file a notice of appeal on the forty-fifth day after the entry of final judgment. At that point, the rate at which post-judgment interest accrues becomes the market-determined rate, rather than the rate of nine percent. Thus, the judgment debtor’s decision to appeal will retroactively affect the rate of postjudgment interest during the forty-five days immediately following the original judgment.

Maj. op. at 927-928. Rather than offer a reasonable relationship between the disparate treatment during the window and a legitimate government purpose, which the second prong of the rational basis test demands, the majority simply states that equal protection does not require the General Assembly to exact mathematical nicety. See maj. op. at 928. This response is woefully inadequate. However, it is unavoidable because the disparate treatment lacks any justification. Furthermore, the prejudgment-postjudgment distinction eliminates the judgment debtor’s incentive to satisfy judgment or expedite the appeal process.

C

Statutes should be construed in a manner that avoids constitutional infirmities. People v. Zapotocky, 869 P.2d 1234, 1240 (Colo.1994); Committee for Better Health Care v. Meyer, 830 P.2d 884, 894 (Colo.1992); Renteria v. State Dept, of Personnel, 811 P.2d 797, 799 (Colo.1991); Norman J. Singer, Statutes and Statutory Construction § 45.11 at pp. 48-49 (1992 rev.) (stating the courts are to construe legislative enactments in a way that avoids constitutional difficulties to the greatest extent possible). Thus, if a statute is capable of alternative constructions, only one *932of which is constitutional, then the constitutional interpretation must be adopted. People v. McBurney, 750 P.2d 916, 920 (Colo.1988).

A prejudgment-postjudgment distinction effects an unconstitutional distinction between nonappealed and appealed judgement creditors who await satisfaction. Therefore, I reject this alternative. Applying a market-determined rate of interest on both appealed and nonappealed judgments completely neutralizes the financial incentive to appeal; therefore, it is rationally related to the legitimate governmental interest to discourage meritless appeals and encourage the timely payment of judgments. Furthermore, a single rate of interest completely eliminates arbitrary and disparate categories of judgment creditors and debtors.

II

Accordingly, I would find that the market rate of interest as determined by the secretary of state should apply to both appealed and nonappealed judgments. As a consequence, I would reverse the court of appeals and remand with instructions that it return the case to the trial court with directions to recalculate interest applying the market rate of interest as certified by the secretary of state. Therefore, I respectfully dissent.

. The Fourteenth Amendment provides that no state shall "deny to any person within its jurisdiction the equal protection of the laws.” U.S. Const. amend XIV, § 1. We have long recognized that article II, § 25 of the Colorado Constitution provides the same protection. Lujan v. Colorado State Bd. of Educ., 649 P.2d 1005 (Colo.1982); People v. Max, 70 Colo. 100, 198 P. 150 (1921).