Court of Appeal:
$350,000 Restitution Award Proper to Cover Attorney Fees
Trial Judge Blended Two Conflicting C.A. Opinions to Reach Amount More Than Lodestar Figure but Less Than the $375,000 Actually Snipped From Pay-Out From Criminal Defendant’s Insurer
By a MetNews Staff Writer
Div. One of the Fourth District Court of Appeal yesterday affirmed an award in a criminal restitution hearing of $350,000 to compensate two victims of a drunk driver for nearly the amount by which the insurance payment to them was reduced by virtue of their attorney receiving a share of the settlement, but left open the question of whether victims’ travel expenses are compensable items.
Defendant Armando Milan Marrero pled guilty to drunk driving, with enhancements, and was sentenced to five years imprisonment, but was granted probation, a condition of which was spending six months in jail. At a restitution hearing, Marrero was ordered to pay $358,047.79 to the victims, covering $350,000 in attorney fees and the balance in travel expenses.
The victims, Irish youths who had come here to study, were represented by San Diego personal injury attorney Gary A. Sernaker in dealing with Marrero’s insurer. He took the case on a 25 percent contingency basis.
Marrero had a $1.5 million policy, out of which the company paid $100 to a third person in the car the insured struck and who was not seriously injured. Sernaker made a demand on the insurer for the remaining $1,499,900, and got it.
His share was $374,975 which is the amount that the Office of District Attorney sought as restitution, along with travel expenses.
Yesterday’s opinion approves the nearly $350,000 award, arrived at by the trial judge balancing considerations set forth in two conflicting Court of Appeal opinions, but reverses an award of travel expenses incurred in connection with mediation, because the judge made the award the day after announcing that only attorney fees were presently in issue. A remand of the issue was ordered so that the defendant could address the matter after preparation, with the court noting that it was expressing “no opinion on the substantive issue of whether the travel expenses are recoverable as restitution.”
San Diego Superior Court Judge Amalia L. Meza was faced with a decision as to whether to award the victims the actual amount by which their compensation was reduced through the payment to Sernaker, or to reckon what a reasonable fee would be, using the lodestar method.
An opinion of the Fourth District’s Div. One in People v. Millard, rendered on June 22, 2009, declared, in connection with an award at a restitution hearing: “Unless a statute provides otherwise, it is presumed the Legislature intended that the amount of a statutory award of reasonable attorney fees should be determined by application of the lodestar adjustment method.
On the other hand, the Third District in its July 19, 2011 opinion in People v. Taylor, repudiated Millard, saying that “a trial court can award victim restitution for contingency fees without a lodestar analysis.” That approach, it explains, “overlooks the fundamental purpose of the statutory and constitutional right to victim restitution, awarding ‘full restitution’ to the victim” unless there are overriding reasons not to do so.
The court in Taylor declared:
“If a defendant feels the victim is seeking restitution for unreasonable attorney fees, he may present argument and evidence supporting his position. However, where there is uncontradicted evidence the victim incurred attorney fees as a result of the defendant’s actions, it is not an abuse of discretion to award restitution for the fee without resorting to the lodestar method.”
Meza employed what Justice Patricia Guerrero described in yesterday’s opinion as “hybrid analysis.” She employed the lodestar method, as prescribed by Millard, determined that a reasonable fee, based on hours expended times $350 an hour would have been about $125,000, but adjusted the figure upward, taking into account the contingency nature of the representation and the considerations articulated in Taylor, and arrived at a figure approaching what was paid to Sernaker.
“The trial court’s analysis was understandable in light of the conflicting authorities discussed above. And it was. in fact, a rational method for calculating restitution in this case. The court began with a lodestar analysis but recognized that the victims* contingency fee arrangement was the most important factor. It awarded what it considered a reasonable fee of 3350.000, more than the bare lodestar calculation but less than the full contingency fee paid by the victims. The court’s award was neither arbitrary nor capricious, and we discern no abuse of discretion.”
High Insurance Coverage
Marrero, who was 20 at the time of the July 14, 2016 accident, argued on appeal:
“If the appellant, a minor, had carried the state mandated insurance of $15,000/$30,000 then the total fee that Mr. Sernaker would have charged his clients, and which would have been the subject of the restitution are attorney fees of $7,500....The fact that the victims were able to recover more, and that Mr. Sernaker was able to charge more because Appellant was well insured does not change the underlying question of whether the fees incurred were reasonable. The inequity was compounded in this case by the tripling the amount of fees awarded.”
“Marrero appears to argue that, because the victims would have been severely undercompensated had Marrero carried less insurance, they cannot be heard to complain if they are only moderately undercompensated now. This argument is wholly unpersuasive. Among other things, it runs directly counter to the purpose of restitution, which is to make the victims whole….It also misapprehends the purpose of the restitution order. The order does not compensate Sernaker; he has already been paid. It compensates the victims for their losses caused by Marrero’s criminal conduct. Those losses include the standard contingency fee paid to their attorney, out of a settlement that would otherwise have compensated them for their injuries. There is nothing inequitable about ensuring that those losses are paid by Marrero, who caused the victims’ injuries and was the reason the victims retained Sernaker in the first place.”
Addressing the travel expenses, Guerrero said:
“While Marrero was aware that the prosecution had requested travel expenses, he was explicitly told by the court they were not at issue in this restitution hearing. To comply with due process, Marrero was entitled to adequate notice that the scope of the hearing had changed.”
She went on to say:
“While the court’s desire to resolve the entire issue of restitution was understandable, it was required to ensure that Marrero had adequate notice that it would do so. Marrero objected based on due process, but the court proceeded anyway. This procedure was fundamentally unfair….We must therefore reverse the portion of the restitution order covering travel expenses and remand for a new restitution hearing.”
The case is People v. Marrero, D076712.
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