P. v. Ortiz

Filed 1/28/10 P. v. Ortiz CA2/8

NOT TO BE PUBLISHED IN THE OFFICIAL REPORTS

California Rules of Court, rule 8.1115(a), prohibits courts and parties from citing or relying on opinions not certified for publication or ordered published, except as specified by rule 8.1115(b). This opinion has not been certified for publication or ordered published for purposes of rule 8.1115.

IN THE COURT OF APPEAL OF THE STATE OF CALIFORNIA

SECOND APPELLATE DISTRICT

DIVISION EIGHT

APPEAL from a judgment of the Superior Court of Los Angeles County. Bob Bowers, Judge. Reversed.

Edward J. Haggerty, under appointment by the Court of Appeal, for Defendant and Appellant.

Edmund G. Brown, Jr., Attorney General, Dane R. Gillette, Pamela C. Hamanaka, Assistant Attorney General, Steven E. Mercer and Marc A. Kohm, Deputy Attorneys General, for Plaintiff and Respondent.

* * * * * *

INTRODUCTION

Appellant Juan Ortiz was convicted of insurance fraud and conspiracy to commit insurance fraud after the hotel he owned was burned in an obvious arson fire. We find that the prosecution failed to establish the prerequisites to the admissibility of an alleged coconspirators lengthy testimonial statement taken by two law enforcement officers without affording the defendant a contemporaneous opportunity to cross-examine the coconspirator. Undisputed evidence showed that the conspiracy had been thwarted by the time of the interrogation, and the coconspirators statements were not made in furtherance of a charged conspiracy to deceive law enforcement. We conclude for that reason that the admission of a recorded police interrogation of one of the alleged but uncharged coconspirators violated appellants right to confrontation under the United States Constitution. As respondent has failed to show the error was harmless under the correct standard of review, we reverse the judgment. We do not reach appellants remaining contentions.

BACKGROUND

1. Procedural History

At 3:41 a.m., August 16, 2001, a fire broke out at a residential hotel known as The Palomar Hotel. The incident frightened dozens -- and killed one -- of the residents, and it severely injured several firefighters when the third and fourth floors of the hotel collapsed.

On April 23, 2004, the hotel owner, appellant Juan Ortiz, was charged by information with 11 felony offenses relating to this fire. The charges included murder, conspiracy to commit arson and insurance fraud, arson causing great bodily injury, arson of an inhabited structure or property, and insurance fraud.

Appellants first jury trial commenced July 5, 2005. On October 11, 2005, the jury convicted him of count two, conspiracy to commit insurance fraud, and count 10, insurance fraud in violation of Penal Code section 550, subdivision (a)(1). The jury was unable to reach verdicts on the remaining counts, and the trial court declared a mistrial as to counts 1, 3 through 9, and 11.

Appellants second trial on counts one, three through nine, and 11, began March 7, 2006. On July 5, 2006, the jury found Ortiz guilty of insurance fraud, in violation of Penal Code section 550, subdivision (a)(5), as alleged in count 11. The jury was unable to reach verdicts on the remaining counts, and the trial court declared a mistrial as to them. The court denied appellants motion to dismiss the remaining counts, and a third jury trial went forward on September 21, 2006.

During the third trial, appellant brought a motion for new trial as to counts 10 and 11 on the ground of newly discovered, previously unavailable evidence: the live testimony of Joseph Lewellen, who had previously been charged as a coconspirator. Although the charges against Lewellen had been dismissed after the preliminary hearing and never refiled, he did not receive immunity for his testimony until the third trial. The court denied the motion on January 22, 2007. The third trial resulted in acquittal on all remaining charges.

On May 8, 2007, the trial court sentenced appellant to five years in prison, consisting of the upper term of five years as to count 2, conspiracy to commit insurance fraud, and the middle term of three years each as to counts 10 and 11, insurance fraud, with the latter terms stayed pursuant to section 654. Custody credit totaled 2,533 days. Appellant filed a timely notice of appeal the same day.

2. The Prosecution Evidence -- First Trial

Appellant purchased the 48-room Palomar Hotel in 1998, taking title with his wife, Luz Ortiz.[1] In August 2001, the residential hotel had 40 tenants living in 31 rooms, with 17 rooms vacant. Appellants brother, Arturo Ortiz, also known as Juan Salazar, was employed as the hotels resident manager. Appellants stepfather, Joseph Lewellen, worked in the office. Even though Lewellen spoke little Spanish, he helped out when appellant, who spoke primarily Spanish, had difficulty reading or understanding English or communicating with tenants.

As soon as he had purchased the hotel, appellant was found to be in violation of various fire, housing, and health and safety codes. The court fined him, placed him on probation, ordered him to remedy the violations in five phases, each with an interim deadline, and ordered appellant not to sell the hotel without leave of court.

In May 1999, a fire in the building next door substantially damaged three rooms at the Palomar Hotel. The back wall of the building burned, and some windows were burned out. Appellant presented a proof of loss to his insurance company and received over $200,000 as a result of that claim.

In 2000, appellant consulted a lender and applied for a $500,000 loan to pay the cost of repairs. The lender notified him on June 6, 2001, that he would have to obtain a subordination agreement from the holder of the first trust deed and a letter from the city of Los Angeles (City) detailing repair requirements. The lender never received the requested documents, and so the application went no further.

In the spring of 2001, appellant was charged with a probation violation for failing to bring the building into compliance. The court extended appellants deadline to June 28, 2001.

On June 21, 2001, a real estate agent presented to Lewellen a $600,000 offer to purchase the hotel. Lewellen said he would discuss the offer with his stepson. The broker never heard back from him.

A building inspector with the Los Angeles Department of Building and Safety found violations on July 10, 2001, and ordered appellant to comply within 90 days. On July 20, 2001, a City electrical inspector found cracked conductors, broken insulation, abandoned wiring, and some missing smoke detectors. He set a compliance date of August 24, 2001.

Appellants counsel in a 1999 civil matter, Buffy Lyn Roney, testified that appellant could speak, read, and understand only very simple English and that Lewellen wrote letters to her for appellants signature. She thought that Lewellen was a domineering man who was abusive toward appellant, and that appellant was passive and did whatever Lewellen told him to do, even if it was dishonest. Roneys legal services ended in a fee dispute, and she claimed that Lewellen encouraged appellant to commit perjury when the dispute went to trial.

In April or May 1999, Roney went to the hotel and spoke to Lewellen, who told her about the repairs to the hotel the City had demanded; Lewellen complained that it was discriminatory and unfair. When Roney asked whether appellant intended to make the repairs, Lewellen said, Either make the repairs or burn it down. Sometime after that, Lewellen left a message on her machine to the effect that he wanted to hire an attorney who would play really dirty, and later she received a call from them about bringing a fraud action against a broker for failing to disclose problems with the hotel at the time of purchase. Roney referred appellant to a real estate lawyer.

On August 4, 2001, Lewellen telephoned the Hollywood Division of the Police Department to report that two days earlier, a tenant had threatened to kill him and burn down the hotel. Lewellen reported that appellant and Arturo witnessed the incident.

The fire broke out at 3:41 a.m. on August 16, 2001. Dozens of residents were inside at the time. Some climbed out of windows and clung to the ledges until firefighters rescued them. Several firefighters were severely injured when the third and fourth floors of the hotel collapsed. One resident fell to her death after lowering her children to firefighters who were on a ladder.

Arturo also died. Firefighters found his charred body bent over a partially filled canister of gasoline. Despite the August heat, he was wearing multiple layers of clothing, which is a common practice of arsonists. Arturos clothing later tested positive for gasoline residue. Investigators found pour patterns of an ignitable accelerant on the first landing, the stairs to the second floor, the second floor landing, and on the stairs to the third floor. The odor of gasoline permeated those areas. They determined that the electronic ignition of the pilot light of a nearby water heater had ignited gasoline vapors, causing the explosion which killed Arturo and started the fire. One testified that it was the most obvious case of arson he had ever investigated.

Not far from where they discovered Arturos body, investigators found several five-gallon buckets filled with gasoline. They located five more buckets of gasoline in other areas -- 40 gallons in all.[2] A fingerprint expert identified appellants fingerprint on the lid of one of them and his palm print on a bag in which a bucket was found.

After the fire, detectives found $10,400 in cash in the trunk of Arturos car, along with family birth certificates, payroll checks payable to Arturos common law wife Maria Elena Delgado, Ms. Delgados Mexican passport, tax returns, and marriage license (with Ms. Delgados first husband). They also found a painting of the Last Supper. According to Ms. Delgado, documents and money were ordinarily kept in the hotel safe. Later, at a storage unit not far from the hotel, other items were seized including hotel furniture, a refrigerator, and Arturos vehicle registration certificate. Lewellen had rented the storage unit on August 2, 2001, listing appellant, Arturo and Delgado as persons with authorized access.

Delgado testified that she lived at the hotel with Arturo and their daughters. A few days before the fire, when she noticed that the stove and refrigerator were missing from their rooms, Arturo told her that the rooms were going to be repaired. When she left for work the afternoon before the fire, the painting of the Last Supper still hung on the wall of their apartment. She said it had sentimental value for Arturo.

Hotel resident Miguel Galindo -- husband of the woman who died trying to escape the fire -- testified that he had observed appellant and Lewellen filming the hotel a few days before the fire. A few weeks after the blaze, when Galindo encountered Lewellen at the storage facility, Lewellen accused him of having set the fire.[3]

The hotel was insured by California Fair Plan with a $900,000 limit on the building and $50,000 on the contents. In February 1999, Lewellen had signed the application for the insurance, listing appellant as the owner. On August 17, 2001, Lewellen telephoned the hotels insurance agent to report the claim, and the agent notified California Fair Plan.

After the fire, appellant retained a public insurance adjuster, William G. Rake with Greenspan Company (Greenspan). Rake testified that he met with appellant and Lewellen. Because the hotel was unsafe and badly damaged, it was not possible to create an inventory of the contents by examination. Thus Lewellen, who Rake believed to be in charge, gave him a list of items that had been in the hotel. Rake created an inventory based on the list and his conversations with Lewellen. Because Rake spoke no Spanish, all conversations were with Lewellen, even when appellant was present. No one translated for appellant.

Lewellen told Rake that each room contained an eight-drawer dresser, a double bed, a five-foot-round wooden table, two chairs, a headboard, a lamp, a bedside table, and bedding. Lewellen also claimed that the hotel kept six to eight small refrigerators and six to eight 19-inch color televisions, and the hotel would rent these to tenants. Lewellen told Rake that the televisions had been purchased in 2001 during a close-out sale at Montgomery Ward and that the refrigerators had been purchased new at Sears that same year. Lewellens list included 60 box springs and mattresses that Lewellen claimed were new -- purchased from a Marriott hotel and a Holiday Inn in 2001. King-size sheets were on the list even though there were no king-size beds. Lewellen told Rake that the hotel stored eighteen 19-inch television sets, mattresses, and other furniture in rooms on the north side of the hotel that had been rendered uninhabitable by the 1999 fire. Lewellen also told Rake that he could not produce records or receipts because the authorities had seized them.

Rake gave the list to a Greenspan inventory specialist, Larry Redholtz, along with the values of the items listed. Redholtz prepared a spreadsheet and met with Lewellen and appellant. Ordinarily, Redholtz would have obtained information about the age of the items from the insured during such a meeting. However, he did not bother to do so because the values were so overstated and the policy limit was only $50,000. Redholtz testified that the inclusion of nonexistent king-size sheets was his own typographical error.

Using the information Lewellen provided, Rake prepared a sworn proof of loss that appellant and Luz signed before a notary (but not in Rakes presence) on October 26, 2001. Appellant claimed policy limits of $50,000 for the hotel contents, but represented the value of all lost items to be $231,374. Rake sent the proof of loss to S.W. Eller, California Fair Plans adjustor.[4]

James Kumura, a financial analyst and certified fraud examiner for the Bureau of Alcohol, Tobacco, Firearms and Explosives (ATF), testified regarding records and receipts seized from appellants home on August 22, 2001, pursuant to a search warrant. There were some Montgomery Ward receipts but none for the purchase of eighteen 19-inch television sets for $239 each as claimed in appellants inventory list. Kumura found a receipt for four 19-inch televisions that had been purchased for $139 each with a 50 percent discount, for a total cost of $302, not the $4,656 for 18 new television sets as listed in appellants inventory. Kumura found a receipt for the purchase of a washer and dryer kept at appellants home but claimed on appellants inventory. There were no receipts from the Marriott or Holiday Inn, which had been listed on the inventory as the sellers of 60 new box springs and mattresses acquired by the hotel before the fire. Kumura also determined that appellant was solvent on the day of the fire.

Frank Frisina, an independent claims adjuster employed by S.W. Eller Company, which had been retained by California Fair Plan, reviewed and investigated questionable items in appellants inventory -- eighteen 19-inch color television sets, eight small refrigerators, and 60 new box springs and mattresses. Frisina testified that he found no new television sets, only old ones with knobs and dials. The mattresses and small refrigerators were used as well.

Frisina employed a salvor, and the two of them inspected the hotel on November 5, 2001, in an attempt to verify the large number of items claimed in appellants inventory. Frisina testified that he found nothing salvageable but did not know whether looters or others had removed anything. Frisina had no idea what had been in 19 of the rooms because they were unable to inspect them. They found some of the items listed in appellants inventory, but not in the quantities stated.

Frisina testified that although the number and age of the items in the inventory were inaccurate, there was in excess of $50,000 in verifiable damage to contents of the hotel. Ultimately, S.W. Eller found that the loss to the contents of the hotel reached $208,000.

Alfred Hess, Vice President of Claims for California Fair Plan, testified that appellants policy provided that any misrepresentation or concealment in a proof of loss would void the policy. Because the Fair Plan adjuster determined that the age of mattresses and television sets had been misrepresented, the company rejected the proof of loss on November 5, 2001, the time of that determination.[5]

3. The Videotape of Lewellens Interview -- First Trial

On November 6, 2001, the day after the Fair Plan rejected the loss, ATF Special Agent Susan Holden and Detective Enriquez interviewed Lewellen at the ATF office. Defense counsel objected to Holdens testimony about the interview, and the court held a pretrial hearing pursuant to Evidence Code section 403.[6] In addition to the hearsay objection, the defense asserted a violation of the Confrontation Clause of the Sixth Amendment of the United States Constitution, based on the holding of Crawford v. Washington (2004) 541 U.S. 36 (Crawford).

Respondent claimed that Holdens testimony came within the Evidence Code section 1223 hearsay exception for coconspirator statements made during and in furtherance of a charged conspiracy. For purposes of the courts determination, both counsel agreed that the last overt act of the conspiracy to commit insurance fraud alleged in count two occurred on October 25, 2001, when the sworn proof of loss was filed with the insurance company. Counsel also agreed that both appellant and Lewellen were taken into custody on November 21, 2001, after the November 6, 2001, interview. Respondent asserted that because the insurance claim remained open and subject to adjustment, the conspiracy had not ended. The court ruled that the conspiracy ended with the November 21, 2001 arrests, overruled the defense objections, and permitted Special Agent Holden to testify regarding Lewellens statements to her and Detective Enriquez.

Holden testified that Lewellen told her about the 1999 fire damage to the three back rooms that were being used for storage. He told the two detectives that he had made several police reports regarding threats by tenants to burn the hotel down. Lewellen also described the hotels issues with the Department of Building and Safety and said that we were fixing and repairing the plumbing, but did not have enough money to fully refurbish it. (As he spoke, he usually said we.) Lewellen admitted that they had taken Arturos stove and refrigerator to the storage facility because, he claimed, fire inspectors had required their removal from the rooms where Arturo lived with Delgado and their children.

Over defense hearsay and Crawford objections, the prosecution played for the jury the two-and-a-half-hour videotape of the interrogation of Lewellen by Holden and Detective Enriquez.[7] The officers questions elicited the following responses:

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