P. v. McBade

Filed 8/13/09 P. v. McBade CA1/1

NOT TO BE PUBLISHED IN OFFICIAL REPORTS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 This opinion has not been certified for publication or ordered published for purposes of rule 8.1115.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

FIRST APPELLATE DISTRICT

DIVISION ONE

Defendant Wanda McBade pleaded no contest to a charge of felony embezzlement (Pen. Code,  508, 487, subd. (a)).[1] The trial court ordered defendant to pay restitution of certain amounts to her former employer, City Mechanical, Inc. (City Mechanical). However, the court did not award some categories of restitution requested by the prosecutor, including: (1) attorney fees incurred by City Mechanical to establish defendants wrongdoing in a civil action that preceded the criminal prosecution; (2) income lost by City Mechanicals principals, Ronald Tinkey and Russell Will, as a result of the time they spent attending and testifying at the civil trial; and (3) lost income and professional fees resulting from the attendance of Tinkey, Will, and other potential witnesses at the restitution hearing. The People appealed the restitution order. Because the court did not award the requested categories of restitution, and did not state on the record any compelling and extraordinary reasons for not doing so, as required by section 1202.4, subdivision (f), we reverse the restitution order and remand for the court to conduct further proceedings and to make findings as to whether, and in what amount, if any, to award restitution for these claimed losses.

I. Factual and Procedural Background

City Mechanical installs heating and air conditioning systems. Tinkey and Will are its owners or principals. Defendant was employed as City Mechanicals operations manager and bookkeeper until 2005, when she was terminated after Tinkey and Will became suspicious due to defendants refusal to allow them access to the companys financial information.

Civil litigation between the parties followeddefendant filed a complaint, and City Mechanical filed a cross-complaint. After a bench trial, the civil trial court found that City Mechanical had failed to pay defendant for accrued vacation time when she was terminated, and awarded defendant a total of $41,369.03. The court rejected defendants claims of sexual harassment, hostile work environment, failure to provide rest and meal breaks, and failure to pay for overtime and holidays worked. On City Mechanicals cross-complaint, the court found defendant liable for fraud and conversion, based on defendants use of company funds for personal expenses. The court awarded City Mechanical $10,751.41 for the fraud and conversion, $2,330.50 in interest, and $13,877.50 for reasonable accounting expenses incurred by City Mechanical in investigating the fraud, for a total of $26,959.41. The court also awarded $7,000 in punitive damages against defendant.

In the criminal case, after defendant pleaded no contest to the embezzlement charge, the trial court suspended imposition of sentence and placed defendant on probation for three years, with a condition that she serve 90 days in jail. At a subsequent hearing, the court issued its restitution award, which included sums in three of the six categories of restitution that the People had requestedthe court awarded $14,791 for the actual embezzlement, $2,330.50 in interest, and $13,877.50 for accounting fees incurred to investigate the fraud (the latter two amounts mirroring the amounts awarded in the civil case), for a total of $30,999.[2] The court declined to award any restitution for attorney fees incurred by City Mechanical in the civil case, lost income for Tinkeys and Wills attendance at the civil trial, or lost income and professional fees incurred in connection with the restitution hearing. The People appealed.

II. Discussion

A. Legal Framework and Standard of Review

In California a crime victim has a constitutional right to restitution for losses suffered as a result of a criminal act. (Cal. Const., art. I,  28, subd. (b), par. (13), former art. I,  28, subd. (b).) Section 1202.4 implements this constitutional mandate. Section 1202.4, subdivision (f) provides that, in every case in which a victim has suffered economic loss as a result of the defendants conduct, the trial court must order the defendant to make full restitution unless it finds compelling and extraordinary reasons for not doing so, and states them on the record. ( 1202.4, subd. (f).) A restitution order must fully reimburse the victim or victims for every determined economic loss incurred as the result of the defendants criminal conduct, including, but not limited to, . . . [] . . . [] (E) Wages or profits lost by the victim . . . due to time spent as a witness or in assisting the police or prosecution. . . . [] . . . [] (H) Actual and reasonable attorneys fees and other costs of collection accrued by a private entity on behalf of the victim. . . . ( 1202.4, subd. (f)(3), italics added.) The statute provides that the amount of restitution ordered is to be based on the amount of loss claimed by the victim or victims or any other showing to the court ( 1202.4, subd. (f)), although the defendant has the right to a hearing to dispute the determination of the amount of restitution. ( 1202.4, subd. (f)(1); see also People v. Fulton (2003) 109 Cal.App.4th 876, 885-887 (Fulton).)

We review the trial courts restitution order for abuse of discretion. (People v. Giordano (2007) 42 Cal.4th 644, 663 (Giordano); People v. Maheshwari (2003) 107 Cal.App.4th 1406, 1409 (Maheshwari).) Under this standard, the trial court has broad discretion in setting the amount of restitution for an economic loss; however, [t]o facilitate appellate review of the trial courts restitution order, the trial court must take care to make a record of the restitution hearing, analyze the evidence presented, and make a clear statement of the calculation method used and how that method justifies the amount ordered. (Giordano, supra, at pp. 663-664.) To the extent the parties raise issues of statutory interpretation, we review such questions de novo. (People v. Saint-Amans (2005) 131 Cal.App.4th 1076, 1084.)

B. The Trial Courts Ruling on the Disputed Categories of Restitution

The prosecution submitted to the trial court evidence of the three types of economic loss at issue in this appeal. First, as to attorney fees for the civil trial, City Mechanicals civil attorney, Jay Putnam, submitted a declaration stating that the fees for the portion of the civil trial that related to proving the fact and amount of defendants embezzlement were $74,750; Tinkey and Will also included this amount in the restitution request they submitted on behalf of City Mechanical and themselves. Second, as to lost income resulting from Tinkeys and Wills attendance at the civil trial, Tinkey and Will stated in their restitution request that they were key witnesses in the civil trial and needed to attend each day of the trial, which lasted for 23 court days, or the equivalent of one working month. Tinkey and Will stated that they each lost approximately one months salary of $22,000 each, for a total of $44,000. Finally, at the restitution hearing, the prosecutor requested reimbursement for attendance at that hearing by Tinkey, Will, Putnam, and two accountants who had investigated defendants embezzlement, all of whom attended as potential witnesses for the prosecution. The prosecutor specified the reimbursement rates for these witnesses and the number of hours requested for each; in their appeal brief, the People have calculated the total amount of this request as $3,475.[3]

The court declined to make any award for these three categories of claimed losses. However, the court did not rule that any of the requested categories was not recoverable under the statute or that the evidence presented did not establish the claimed losses; the court also did not state on the record any compelling and extraordinary reasons for its decision. (See  1202.4, subd. (f).) As to attorney fees for the civil trial, the court initially stated that issue was resolved in the civil case. Defense counsel explained that the fee issue had not been determined in the civil case. The court then responded that the court declines to award attorneys fees, but gave no reasons for its decision. The prosecutor then stated that the claimed lost wages also had not been litigated. The court stated that it would not include any other amounts in its restitution order, but again did not state any reasons for its decision. The court stated to the prosecutor: I just gave my restitution order, Ms. Feldman. Im not making any other inclusions into the restitution order. After the court made this statement, the prosecutor did not request that the court state on the record the reasons for its decision.

C. The Trial Courts Restitution Order Must Be Reversed.

Because the trial court did not make any award in the three categories of restitution at issue and did not state on the record any compelling and extraordinary reasons for not doing so, we must reverse the restitution order and remand for the court to conduct further proceedings and to make findings as to whether, and in what amount, if any, to award the requested categories of restitution. (See  1202.4, subd. (f).)

Defendant argues that we should affirm the restitution order because (1) the prosecutor forfeited the argument that the court must state compelling and extraordinary reasons for declining to award full restitution, (2) some or all of the disputed categories of losses are not recoverable under section 1202.4, and (3) the courts overall award was not an abuse of discretion. Defendants arguments are not persuasive.

1. Forfeiture

Defendant argues that the People have forfeited the argument that the trial court was required to state on the record compelling and extraordinary reasons for declining to award full restitution because the prosecutor did not expressly request such a statement at the restitution hearing. We disagree.

In general, neither party may initiate on appeal any claims involving the trial courts failure to properly make or articulate its discretionary sentencing choices; such claims are forfeited if they are not raised in the trial court. (People v. Scott (1994) 9 Cal.4th 331, 353; accord, In re Sheena K. (2007) 40 Cal.4th 875, 881.) However, a claim that a sentence is invalid or unauthorized may be raised for the first time on appeal and is subject to correction whenever the error comes to the reviewing courts attention. (People v. Dotson (1997) 16 Cal.4th 547, 554, fn. 6; Scott, supra, 9 Cal.4th at p. 354.)

In People v. Tillman (2000) 22 Cal.4th 300 (Tillman), the Supreme Court applied the general rule of forfeiture to a restitution fine. In Tillman, the trial court failed to impose a restitution fine and failed to state on the record compelling and extraordinary reasons for not doing so, as required by section 1202.4, subdivision (b). (Tillman, at pp. 302-303.) The Supreme Court held that the Peoples failure to object at the time of sentencing precluded a challenge to the decision on appeal. (Ibid.)

However, in People v. Moreno (2003) 108 Cal.App.4th 1 (Moreno), a case involving victim restitution, the Court of Appeal held that, under section 1202.46, when a trial court fails to award restitution and does not state compelling and extraordinary reasons for not doing so, the sentence imposed is invalid and may be corrected at any time.[4] (Moreno, at pp. 9-10.) Other courts have similarly held that a sentence that awards no restitution, or less than full restitution, is invalid. (See People v. Rowland (1997) 51 Cal.App.4th 1745, 1751 (Rowland) [ 1202.4 requires full restitution unless the court states clear and compelling reasons for a lesser award]; People v. Bernal (2002) 101 Cal.App.4th 155, 164-165 [sentence that fails to award victim restitution, or to award full restitution, is invalid, citing Rowland].)

We agree with the Moreno court that, under section 1202.46, a sentence that fails to award full victim restitution, and does not include an on-the-record statement of compelling and extraordinary reasons for not doing so ( 1202.4, subd. (f)), is invalid and may be challenged for the first time on appeal. Accordingly, we do not address the Peoples argument that, under the circumstances of this case, it would have been futile for the prosecutor to make an explicit request at the hearing for an on-the-record statement of the courts reasons for its decision.

2. Section 1202.4 Authorizes Restitution Here.

Defendant contends that section 1202.4 does not authorize an award of restitution for the lost wages incurred by Tinkey and Will when they attended and testified at the civil trial. Specifically, defendant argues that (1) Tinkey and Will are not victims entitled to restitution under the statute, and (2) the lost wages they are claiming would not have been incurred as a result of defendants criminal conduct. (See  1202.4, subd. (f).) Defendant also suggests that the attorney fees incurred by City Mechanical in connection with the civil trial are not recoverable. We disagree with defendants arguments.

a. Tinkey and Will Are Victims.

Contrary to defendants suggestion, section 1202.4 does not establish that individual employees or owners of a corporate victim cannot also be direct victims of criminal conduct entitled to restitution. There may, of course, be more than one victim of a defendants criminal acts. (See  1202.4, subd. (f) [providing for restitution for victim or victims of defendants acts].) Moreover, [i]n view of the strongly expressed [constitutional and statutory] concern for persons who have suffered loss as the result of criminal conduct, our Supreme Court has given the term victim a broad and flexible meaning. (People v. Crow [(1993) 6 Cal.4th 952, 959-960] [victim includes government agencies and nonresidents]; People v. Broussard (1993) 5 Cal.4th 1067, 1075 . . . [victim includes anyone suffering an economic loss, not merely physical injury].) (People v. Ortiz (1997) 53 Cal.App.4th 791, 796-797, italics added.)

Section 1202.4 contains a definition of victim that is not all-inclusive. Subdivision (k) of the statute specifies that a victim entitled to restitution include[s] corporations and other business entities that are direct victim[s] of the crime (such as City Mechanical here), as well as relatives, cohabitants, or caregivers for individual victims. ( 1202.4, subd. (k), italics added.) In addition, the persons entitled to restitution include individuals who are direct victims: The Supreme Court has described a victim as a person who is the object of a crime (People v. Crow, supra, 6 Cal.4th at p. 957), and has also stated that victims entitled to restitution are those who are the real, actual, immediate, and direct victims of crime . . . . (People v. Birkett (1999) 21 Cal.4th 226, 243 (Birkett).) In Birkett, the court defined [a]ctual as  [e]xisting in . . . fact; . . . real, . . . [citation] (id. at p. 232, fn. 5); and [d]irect as  straightforward, uninterrupted, [or] immediate in time, order or succession, or proceeding [in logic] from antecedent to consequent, from cause to effect, etc., uninterrupted, or generally [e]ffected or existing without intermediation or intervening agency; immediate. [Citation.] (Id. at pp. 232-233, fn. 6.)

Applying these definitions, Tinkey and Will, as the owners and employees of City Mechanical, were actual and direct victims of defendants criminal conduct. They were  real  people who suffered as a result of defendants embezzlement. In addition, their wage losses incurred in attending the civil proceedings (in which defendants fraud was proven) and the criminal restitution hearing were a straightforward, uninterrupted, [or] immediate consequence of defendants conduct.

Defendants reliance on Birkett is misplaced. In Birkett, the Supreme Court held that corporate insurers who reimbursed their insureds for losses pursuant to insurance policies were not themselves direct victims of the crimes. (Birkett, supra, 21 Cal.4th at pp. 229-230, 234, 247.) While Birkett would bar restitution to insurers reimbursing City Mechanical for its losses, it presents no impediment to an award of restitution to Tinkey and Will, who, like City Mechanical, were direct victims of defendants criminal conduct.

b. The Requested Categories of Losses Are Recoverable.

Defendant contends that section 1202.4 limits restitution for lost wages or profits to time spent as a witness in the criminal case, and that expenses incurred in connection with related civil litigation (such as attorney fees) are not covered by the statute. Again, we disagree. As noted above, the nonexclusive list of types of reimbursable economic loss in section 1202.4, subdivision (f)(3) includes [w]ages or profits lost by the victim . . . due to time spent as a witness or in assisting the police or prosecution. . . . ( 1202.4, subd. (f)(3)(E)), and [a]ctual and reasonable attorneys fees and other costs of collection accrued by a private entity on behalf of the victim . . . ( 1202.4, subd. (f)(3)(H)). Moreover, economic losses that are not specifically enumerated in section 1202.4, subdivision (f)(3) are nevertheless recoverable as long as they are incurred as the result of the defendants criminal conduct. ( 1202.4, subd. (f)(3); Giordano, supra, 42 Cal.4th at p. 656; People v. Crisler (2008) 165 Cal.App.4th 1503, 1508 (Crisler).)

Under section 1202.4, subdivision (f)(3), the three categories of restitution at issue in this appeal are recoverable. First, under section 1202.4, subdivision (f)(3)(H), attorney fees incurred by a victim in connection with civil litigation undertaken to prove a defendants wrongdoing and to recover economic losses sustained as a result of the defendants conduct are themselves economic losses for which restitution is appropriate (as are related investigative expenses, for which the trial court here did make an award). (Maheshwari, supra, 107 Cal.App.4th at pp. 1409-1411; accord, Fulton, supra, 109 Cal.App.4th at pp. 882-885.) Contrary to defendants argument, the circumstance that defendant filed her civil complaint before City Mechanical filed its cross-complaint for fraud and conversion does not change the fact that the attorney fees City Mechanical paid to prosecute its cross-complaint were incurred as the result of defendants criminal conduct.[5] The statute authorizes an award of reasonable attorney fees ( 1202.4, subd. (f)(3)(H)); the trial court, of course, has broad discretion in determining the amount of fees to award. (Maheshwari, supra, 107 Cal.App.4th at p. 1409.)

Second, we conclude that lost wages incurred in connection with civil litigation against a defendant to prove and recover economic losses are also recoverable. As noted above, section 1202.4, subdivision (f)(3)(E) provides for restitution for wages or profits lost due to time spent as a witness or in assisting the police or prosecution. In addition, lost wages that a victim incurs to attend legal proceedings as a result of the defendants criminal conduct are reimbursable even if they do not fall within section 1202.4, subdivision (f)(3)(E). In Crisler, the court held that lost wages incurred by the victims surviving family members (who were themselves victims under the statute) to attend the defendants criminal trial were recoverable, even though the family members were not called upon to testify or otherwise assist the prosecution. (Crisler, supra, 165 Cal.App.4th at pp. 1508-1509.) Because expenses incurred in civil litigation against the defendant are recoverable (see  1202.4, subd. (f)(3)(H); Maheshwari, supra, 107 Cal.App.4th at pp. 1409-1411), and because lost wages are a type of economic loss contemplated by the restitution statute (see  1202.4, subd. (f)(3)(E); Crisler, supra, 165 Cal.App.4th at pp. 1508-1509), we conclude that lost wages incurred by a victim as a result of attending and testifying at a civil trial can qualify as economic losses sustained as a result of the defendants criminal conduct.[6] The trial court, again, has discretion in calculating the amount of lost wages that were incurred as a result of defendants criminal conduct. (Giordano, supra, 42 Cal.4th at pp. 663-664; Maheshwari, supra, 107 Cal.App.4th at p. 1409.)

Third, for the reasons discussed above, wages that Tinkey and Will lost when they attended the restitution hearing as potential witnesses and to assist the prosecutor are recoverable. (See  1202.4, subd. (f)(3)(E); Crisler, supra, 165 Cal.App.4th at pp. 1508-1509.) Similarly, the professional fees charged by the victims civil attorney and accountants for their attendance at the restitution hearing to assist the prosecution, and, if necessary, to testify as to the victims economic losses, are recoverable. (See  1202.4, subd. (f)(3)(H) [[a]ctual and reasonable attorneys fees and other costs of collection accrued by a private entity on behalf of the victim].) The trial court has discretion in determining the amount of reasonable expenses to award in this category.

3. Abuse of Discretion

Finally, defendant argues that the trial courts decision to decline to award certain categories of restitution requested by the People was within the courts broad discretion. We disagree.

As defendant correctly notes, and as we emphasize above, the trial court has broad discretion in calculating the amount of restitution to award (see Giordano, supra, 42 Cal.4th at pp. 663-664); moreover, the courts discretion in this area is broader when, as here, restitution is imposed as a condition of probation. (Id. at p. 663, fn. 7.) However, under section 1202.4, the court does not have discretion to award less than full restitution, unless it states on the record compelling and extraordinary reasons for its decision. ( 1202.4, subd. (f).) The court thus does not have discretion to exclude entire categories of requested restitution from its award without explanation.

III. Disposition

The restitution order is reversed. The matter is remanded to the trial court to conduct a further restitution hearing and to make findings on the record as to whether, and in what amount, if any, to award restitution for the three categories of losses at issue in this appeal.

______________________

Graham, J.*

We concur:

______________________

Marchiano, P. J.

______________________

Margulies, J.

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[1] All statutory references are to the Penal Code.

[2] On appeal, the People do not challenge the amounts awarded by the trial court in these three categories.

[3] The prosecutor offered to present this request either through her own factual representations or by presenting testimony from each of the witnesses. Defense counsel stated he had no objection to the prosecutors presenting the information herself, and the court directed the prosecutor to proceed in that manner.

[4] Section 1202.46 provides: Notwithstanding Section 1170, when the economic losses of a victim cannot be ascertained at the time of sentencing pursuant to subdivision (f) of Section 1202.4, the court shall retain jurisdiction over a person subject to a restitution order for purposes of imposing or modifying restitution until such time as the losses may be determined. Nothing in this section shall be construed as prohibiting a victim, the district attorney, or a court on its own motion from requesting correction, at any time, of a sentence when the sentence is invalid due to the omission of a restitution order or fine without a finding of compelling and extraordinary reasons pursuant to Section 1202.4. (Italics added.) Although section 1202.46 applies both to victim restitution and to the restitution fine at issue in Tillman, the Moreno court noted that section 1202.46 was enacted effective January 1, 2000, after the sentencing that was the subject of Tillman. (Moreno, supra, 108 Cal.App.4th at p. 10.)

[5]People v. Lyon (1996) 49 Cal.App.4th 1521, relied on by defendant, is distinguishable. In Lyon, the court held that restitution could not be awarded for fees paid by the victim to a private attorney to oppose defense discovery in the criminal case; such fees were not the result of the defendants criminal conduct, but were instead the result of the defendants defense of the criminal case. (Id. at pp. 1525-1526.)

[6]People v. Friscia (1993) 18 Cal.App.4th 834, cited by defendant, is inapposite. In Friscia, the defendant embezzled from her employer, a small preschool/kindergarten owned by two partners. (Id. at p. 835.) The Court of Appeal held that the partners were not entitled to restitution for the time they spent going through their records to determine the exact amount the defendant had stolen, because there was no evidence the partners had lost any wages or profits as a result of this time expenditure. (Id. at pp. 837-838.) Here, in contrast, Tinkey and Will stated that they did lose wages as a result of attending the civil trial.

* Retired judge of the Superior Court of Marin County assigned by the Chief Justice pursuant to article VI, section 6 of the California Constitution.