Wednesday, August 23, 2017
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Court of Appeal Declares:
Restitutionary Fine Is Not Akin to Disgorgement in a Civil Case
In Misdemeanor Prosecution for Performing Work Without Contractor’s License, Kriegler Writes, Amount Awardable to the Victim Is Actual Economic Loss Suffered—Not All Sums Paid for Work
By a MetNews Staff Writer
The Court of Appeal for this district held yesterday, in a 2-1 opinion, that in a misdemeanor action for performing work without a contractor’s license, a restitutionary fine must be in the amount of the victim’s actual financial loss, not the entire amount paid for the work.
In a civil action, Acting Presiding Justice Sandy Kriegler said, a person can recover all funds paid to an unlicensed contractor—but that, he declared, has no bearing on the amount of a restitutionary fine in a criminal case.
Kriegler’s opinion directs the issuance of a writ ordering the Los Angeles Superior Court’s Appellate Division to vacate its Nov. 16, 2016 opinion reversing the actual-loss restitutionary award by Los Angeles Superior Court Judge Edward B. Moreton to homeowner Sharon Curto, Jr., and write a new opinion affirming that award.
Under Penal Code §1202.4(f)(3)(A), Kriegler pointed out, a restitutionary fine is to be in the amount of “the actual cost of repairing the property when repair is possible.”
Plain Language
He wrote:
“The plain language of Penal Code section 1202.4 limits the trial court’s restitution order to actual economic losses suffered by the victim in the circumstances of this case….The restitution order is not intended to provide the victim with a windfall; instead, a victim is entitled to reimbursement only for his or her actual loss.”
Kriegler went on to declare:
“Under the statutory scheme, the civil remedy of refunding “all compensation paid” is intended to deter unlicensed contractors by depriving them of all monetary benefit….The restitution statute, in contrast, serves primarily to compensate victims for actual economic losses.”
Another Aspect
The Appellate Division also said:
“[T]he homeowner was entitled to restitution of attorney fees incurred in defending against defendant’s civil action for unpaid compensation and in prosecuting her counterclaim to recover the money she paid defendant under the contract.”
With that, Kriegler agreed.
He pointed to Penal Code § 1202.4 (f)(3)(H) which provides that a restitutionary fine is to include “[a]ctual and reasonable attorney’s fees and other costs of collection accrued by a private entity on behalf of the victim.”
The jurist declared:
“Walker initiated the civil action, erroneously because he was not a licensed contractor, to recover the remaining balance on the contract. Curto retained counsel for the purpose of recovering her economic loss and prevent further economic loss ‘stemming from [Walker’s] unlicensed and unlawful activities.’ The evidence is undisputed Curto incurred attorney fees due to Walker’s ill-conceived action. Therefore, the Appellate Division did not err in holding that the trial court abused its discretion in failing to award Curto restitution for attorney fees incurred in efforts to recover her economic damages as a result of Walker’s work as an unlicensed contractor.”
Acting Justice Kim Dunning, an Orange Superior Court judge serving on assignment, concurred in Kriegler’s opinion.
Justice Lamar Baker wrote a concurring and dissenting opinion in which he questioned Moreton’s methodology in calculating actual damages.
Curto paid Walker $61,428.24 for repainting and repairing her house, then sued for an additional $7,768. Moreton accepted as reasonable the estimate she received that it would cost $15,800 to repaint the house and do repairs, but found that some of the damage was attributable to weathering, and took into account the unpaid sum, awarding victim restitution in the amount of $1,299.
Baker wrote:
“At the time Curto agreed to the contract, she believed (based on defendant’s misrepresentations) that he was a licensed contractor. Had she known before entering into the contract that defendant in fact had no license, there is no reason to believe she would have agreed to pay such a high amount. Indeed, there is good reason to conclude otherwise: in addition to plain common sense, which tells us, for instance, that a buyer will pay less for a chair built by IKEA than one built by Charles and Ray Eames, Curto’s testimony during the restitution hearing indicated she relied on the belief that defendant was licensed in selecting him for the renovation job. By treating the license-based contract price as a given, rather than reducing it to account for defendant’s subsequently discovered unlicensed status, the trial court gave defendant a windfall—and failed to make Curto fully whole. I would accordingly remand the matter to the trial court to recalculate the restitution award consistent with the views I have expressed.”
The case is Walker v. Appellate Division of the Los Angeles Superior Court, B280100.
Deputy Public Defenders Albert J. Menaster and Nick Stewart-Oaten represented Walker and Santa Monica Deputy City Attorney Melanie Skehar acted for the People.
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