Teachers' Retirement Bd. v. Genest

In Teachers' Retirement Bd. v. Genest (2007) 154 Cal.App.4th 1012, the Teachers' Retirement Board filed a petition for writ of mandate and complaint for injunctive and declaratory relief against the state, asserting that the state had violated its contractual obligation to make contributions to a pension benefits fund. The superior court entered judgment in the plaintiff's favor and awarded prejudgment and postjudgment interest at the rate of 7 percent per annum. (154 Cal.App.4th at pp. 1024-1026.) On review, the Third District agreed that the state had breached an express contractual obligation. (Id. at pp. 1030-1032, 1036, 1045.) The court also decided that the plaintiff was entitled to prejudgment interest at the rate of 10 percent per annum because "Civil Code section 3289 specifies that the applicable interest rate for prejudgment interest in breach of contract cases is 10 percent. This rate, set by the Legislature, from which public entities are not excepted, replaces the default rate in the California Constitution for instances in which the Legislature has not acted to set another rate. Having made state and public entities liable for prejudgment interest on all contract claims, whether liquidated or unliquidated, the interest rate set forth for such claims in Civil Code section 3289 necessarily applies to these entities absent an express legislative exemption." (Genest, at p. 1045.)