P. v. Ingalsbe

Filed 3/22/07 P. v. Ingalsbe CA

NOT TO BE PUBLISHED IN OFFICIAL REPORTS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 This opinion has not been certified for publication or ordered published for purposes of rule 8.1115.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

Appellant, the owner of an auto body repair shop, was convicted of two counts of insurance fraud based on his preparation and submission of a repair estimate solicited by an undercover investigator as part of a sting operation. Appellant contends that: (1) the evidence was insufficient to justify the jurys verdict; (2) he cannot be convicted of insurance fraud based on the submission of a claim against a fictitious policy; (3) the trial court should have granted his motion for a mistrial based on the introduction of improper testimony that there had been prior complaints against appellants shop; and (4) his trial counsel was ineffective in failing to prevent or adequately respond to the introduction of that improper testimony. We reject all of these contentions, and affirm the judgment.

facts and procedural background

Appellant owns and operates an auto body repair shop. On December 7, 2004, an undercover investigator named Samson Gee brought a car to appellants shop. Gees visit was part of an insurance fraud sting operation being conducted jointly by the California Department of Insurance and the San Mateo County District Attorneys Office. Before Gee brought the car to appellants shop, a technician with the Bureau of Auto Repair for the State of California had deliberately damaged the car in different ways in two separate areas, in a manner intended to make it appear that the car had been in two distinct accidents, occurring at different times. Both areas of damage were on the right-hand side of the car. The damage that the body shops were to be told was covered by the insurance was a gouge on the rear, which the Bureau of Automotive Repair estimated would cost approximately $3,104 to repair.

During Gees visit to appellants shop, Gee wore a wire linked to a tape recorder.[1] The resulting tape recording was played to the jury at trial, and the tape, as well as a transcript of the recorded conversation, were introduced into evidence at trial. The transcript discloses that at the outset of Gees encounter with appellant, Gee told appellant that some of the damage to the car was there before I bought the car, and that I bought it with that damage . . . . In his trial testimony, Gee clarified that the damage he was pointing out during this part of the conversation was the damage to the right front fender. The transcript also records Gee telling appellant that the damage from his purported recent accident was located on the cars back rear where it had been sideswiped.

Gee then asked appellant, Do you know if theres any way you can do something with this in the same, in the same claim? Gee explained that they didnt take photos or anything yet and I just told them it[]s just right side damage, I didnt say anything else. Appellant responded that Ill write the estimate . . . however you say I need to write it, adding that I see that this whole side is damaged and . . . so both areas stick out. . . . So Ill, well just write the estimate the way I see it.

Gee then reiterated that some of the damage had occurred before he bought the car. Appellant responded by asking, Well, again, the question is how (unintelligible) [sic] you want an estimate on the damage on the vehicle. When Gee clarified that he wanted an estimate . . . on the damage to the right . . . , appellant replied, Okay, all right, then I will take it upon myself to do that. Appellant also commiserated with Gee about how unfortunate it was that Gees car had been damaged so soon after he bought it.

Gee then explained to appellant that the insurance guy said hes not going to come out, and asked if appellant could fax the estimate to the insurer. Appellant agreed to do so, and asked for the name of the insurer.

After some further conversation about the details of the repair, appellant asked Gee, Do you have a big huge deductible or something? Gee responded that his deductible was $500, and asked, Why? Is that something you can work into it or something? Appellants immediate response appears from the transcript to have been unintelligible on the tape. After Gee replied, Okay, appellant then said, Yeah. Yeah, we can see what we can do on this.

Gee then gave appellant the claim number, and the name and fax number of the person who was handling the claim. In fact, the claim number was one that had been established by the insurance claims manager solely for the purpose of the governments sting operation, with which the insurance company was cooperating.

After asking appellant how long the work would take to complete, and exchanging some concluding pleasantries, Gee left appellants shop. Shortly thereafter, appellants body shop faxed an estimate to the claims manager who was cooperating with the investigation. The estimate was introduced into evidence at trial.

On April 15, 2005, appellant was charged with violating Penal Code section 550, subdivision (a)(5)[2] (section 550(a)(5)), which prohibits knowingly preparing a writing with the intent to present it in support of a fraudulent claim, and section 550, subdivision (b)(1) (section 550(b)(1)), which prohibits knowingly assisting or conspiring with a person to present a statement in support of an insurance claim, knowing that the statement contains false material information.[3] After a jury trial, appellant was convicted on both counts. Appellants motion for a new trial was denied.

The trial court suspended imposition of sentence on the section 550(a)(5) count, placed appellant on three years supervised probation, and ordered him to serve 90 days in jail as one of the conditions of his probation. On the section 550(b)(1) count, the court suspended imposition of sentence pending successful completion of probation on the section 550(a)(5) count. This timely appeal ensued.

Discussion

A. Sufficiency of the Evidence

Appellants first argument on appeal is that the evidence is insufficient to support his conviction, because there is insufficient proof that he intended to commit fraud when he submitted the repair estimate. In addressing this question, we are required to review the whole record in the light most favorable to the judgment below to determine whether it discloses substantial evidencethat is, evidence which is reasonable, credible, and of solid valuesuch that a reasonable trier of fact could find the defendant guilty beyond a reasonable doubt. [Citations.] (People v. Hawkins (1995) 10 Cal.4th 920, 955, overruled on another ground in People v. Lasko (2000) 23 Cal.4th 101, 109-110; accord, Jackson v. Virginia (1979) 443 U.S. 307, 319; People v. Cuevas (1995) 12 Cal.4th 252, 260.) Moreover, we are bound to give due deference to the trier of fact and not retry the case ourselves. [Citations.] (People v. Sanchez (2003) 113 Cal.App.4th 325, 330.)

In support of his claim that the evidence was insufficient to support his conviction, appellant complains that the tape recording on which the prosecution relied was partially unintelligible and obscured by noise, and that it is unclear from the tape what portion of the car was being pointed to at any given time in the conversation, or whether appellant was listening to, or could even hear, what Gee was telling him. This argument ignores Gees trial testimony, in which he clarified that he told appellant specifically that the damage to the front fender of the car had been there when he purchased it.

Appellant also argues that his estimate simply reflects the cost of repairing all of the damage to the car, without incorporating any representations as to what portion of that damage was or was not covered by insurance, and that if this had been a genuine scenario instead of a sting operation, the insurance company could and perhaps would have clarified the matter before paying the claim. The context of appellants conversation with Gee, however, provides substantial evidence to support the jurys inference that appellants transmission to the insurance company of a combined estimate for repairing all of the damage was intended at least to attempt to induce the insurance company to treat the entire estimate as part of a single claim, all of which was purportedly for covered damage.[4]

Essentially, appellants attack on the sufficiency of the evidence in the present case boils down to a laundry list of ways in which the prosecutions case against appellant could have been stronger, and in which the jury could have interpreted the evidence differently. But our task in reviewing the sufficiency of the evidence is neither to critique any perceived deficiencies in the prosecutions case, nor to substitute our own reading of the evidence for that arrived at by the jury. Highlighting the absence of hypothetical evidence that would have been more definitive is not equivalent to establishing that the evidence that was adduced was insufficient. Of course, a reversal based on a claim of insufficient evidence is only appropriate when it clearly appears that upon no hypothesis whatever is there sufficient substantial evidence to support it. [Citation.] (People v. Redmond (1969) 71 Cal.2d 745, 755.) In the present case, our review of the record convinces us that the evidence was sufficient to justify a rational jury in finding appellant guilty beyond a reasonable doubt. Accordingly, we affirm.

B. Fictitious Nature of Insurance Policy

The claims manager who cooperated with the sting operation set up a dummy claim file on his companys computer for the purpose of the investigation. There is no evidence, however, that any actual insurance policy was ever issued on which Gee could have made a bona fide claim. Based on that fact, appellant argues that one element of the offenses with which he was charged was not and could not be proven, and that his convictions on both counts should therefore be reversed.

The sole case appellant cites in support of this argument is People v. Burroughs (1991) 234 Cal.App.3d 245 (Burroughs). Burroughs involved a conviction for unlicensed practice of medicine in violation of former Business and Professions Code section 2053, which provided that the unlicensed practice of medicine was a felony when it occurred under circumstances or conditions which cause or create risk of great bodily harm . . . . The defendant had been convicted based on his treatment of an undercover officer who was not, in fact, suffering from the ailments he described to the defendant. If the officer had been suffering from those ailments, the course of treatment the defendant prescribed for him would have created a risk of harm. Because the officer was actually healthy, however, the treatment (massage and a lemonade diet) was harmless. Based on the clear language of the statute, the Burroughs court held that the defendant could not be convicted of violating former Business and Professions Code section 2053 because the officer was not actually threatened with serious bodily harm or illness from the defendants treatment. (Id. at p. 251.)

In the present case, however, there is nothing in the language of either of the statutes under which appellant was convicted that requires the defendants conduct to cause, or create a risk of, actual payment of a claim under an existing insurance policy.[5] Section 550(a)(5) does not even use the term insurance policy, referring only to the presentation of a false or fraudulent claim. (Italics added.) Section 550(b)(1) does require the existence of a claim for payment or other benefit pursuant to an insurance policy, but in our view, this language requires only the existence of a claim to a payment or benefit under an insurance policy, not the existence of the policy itself. Thus, as a simple matter of statutory construction, Burroughs, supra, 234 Cal.App.3d 245, is readily distinguishable.

We note further that appellant cites no authority supporting his argument in the context of insurance fraud, and our research has revealed none. On the contrary, what little case law exists in this area supports respondents position that a conviction for violation of sections 550(a)(5) and 550(b)(1) can be valid even in the absence of a bona fide insurance policy. In People v. Grossman (1938) 28 Cal.App.2d 193, which was decided under a predecessor of section 550, the defendant argued that his conviction should be reversed because the party on whose behalf the defendant had presented the fraudulent claim did not actually have a right to recover under the policy. The court rejected this claim on the ground that a valid insurance policy existed, but went on to remark that the gravamen of the offense [of presenting a false insurance claim was] the defendants intent to defraud. That intent did not depend solely on the legal obligation, if any, arising out of [the insurance] contract. (Id. at pp. 202-203.)

This result makes sense, in light of the statutory language quoted above. Accordingly, we concur with respondents position that the presentation of a fraudulent claim to an insurance company can result in valid convictions under sections 550(a)(5) and 550(b)(1), even if the company has not actually issued an insurance policy against which a legitimate claim could be made.

C. Evidence of Prior Complaints

1. Trial Proceedings

The prosecutions first witness at appellants trial was Eric Winkler, a criminal investigator with the fraud division of the California Department of Insurance. Winkler explained that he had worked with the San Mateo District Attorneys office in planning the undercover investigation in this case.[6] The prosecutor then asked Winkler how the investigators had determined which auto body shops to target and invited him to briefly describe . . . how this started. Appellants counsel made no objection.

In response, Winkler testified that We obtained information from several resources to begin developing a list of body shops to visit. We obtained information from the Bureau of Automotive Repair, from the National Insurance Crime Bureau, as well as the Department of Insurance[s] own database. From there we were looking for referrals or complaints that were lodged against body shops within the county. I went through the nature of those complaints and selected those which appeared to have an element of fraud. Winkler added that before acting on this information, he verified that the shops that had the complaints were still under the same ownership or same proprietorship as the actual complaint. So we werent going after anybody other than those who had been complained upon.[7] Appellants trial counsel made no objection to the prior complaints evidence at this time, or at any time during the remainder of Winklers direct testimony.

On cross-examination, appellants trial counsel asked Winkler about the origin of the complaints based upon which the investigators had picked your targets. Winkler reiterated that they had received information from the agencies he had named earlier. Appellants counsel then asked, as specifically to [appellants] body shop, how many complaints did you receive about them from the Department of Insurance? Winkler responded that he did not have the figures with him, but he had had them at one time. Appellants counsel reiterated this line of inquiry as to the other agencies involved, and received the same response. Appellants counsel then asked whether Winkler could provide us with every single complaint that was lodged against [appellants body shop] before you targeted them? Winkler responded that he was not sure that information was available. Appellants trial counsel asked whether that was because the prosecutor would not release the information. At that point, the prosecutor objected, and requested a side bar conference. After an unreported colloquy between the trial court and counsel, the jury was excused, and a discussion of the matter ensued on the record.

Appellants trial counsel explained that he had requested discover of the prior complaints informally from the prosecutor, and that she had responded that th[ey] werent really complaints, and had declined to disclose them. The prosecutor responded that she had not received any formal written request or motion for disclosure of the documents, noting that discovery motions relating to the same issue were pending in other cases arising from the same investigation, but that appellants counsel had chosen to go to trial without making such a motion, and thus should not have complained about the issue in front of the jury. The trial judge indicated that he was inclined to agree with this view. Appellants counsel responded that I assumed that if she wasnt going to disclose it, she wasnt going to use it in trial.

After some further discussion regarding the procedural history and posture of the issue regarding the prior complaints evidence, appellants counsel remarked that [w]hat the relevance of any of this is, is beyond me, quite frankly, but argued that because the prosecutor had introduced the evidence, she had opened the door, and thus entitled him to discovery. After further discussion, and a brief recess, the court asked appellants counsel what relief he was asking for, and counsel reiterated that what he wanted was for Winkler to produce the documents underlying the prior complaints evidence. The trial judge declined to issue such an order in the absence of a formal discovery motion, but reiterated that in any event, he did not see how the information was relevant. He opined that it was too bad that [the prior complaints evidence] was brought up on direct, but noted that appellants counsel had not objected at the time, and indicated that there should not be any further inquiry in this regard as it relates to this.

Appellants counsel agreed with the trial courts assessment regarding the lack of relevance of the prior complaints evidence, and reiterated that the reason he had not filed a discovery motion is that he did not think the information would be used at trial. When the court declined to reconsider its ruling, appellants counsel then asked for a mistrial, on the ground that it was highly prejudicial to have my client painted as somebody thats targeted because of consumer complaints without producing those complaints . . . , which he indicated that the prosecutor had told him were not, in fact, complaints from consumers, but rather from insurance companies.

The prosecutor responded by admitting that Winklers testimony would permit the jury to draw an inference that appellant had been targeted on the basis of complaints, but urged the court to address the issue not by granting a mistrial, but rather by instructing the jury to disregard the information, and not base its decision on any such inference. Appellants counsel argued that the prejudice caused by the prior complaints evidence could not be cured by an instruction, and reiterated that he had been taken by surprise by the prosecutors introduction of the prior complaints evidence.

After taking another recess, the court affirmed its ruling that given appellants counsels failure to file a formal discovery motion, and his failure to object when the prior complaints evidence originally came in, the motion for mistrial would be denied, although the parties would be directed not to address the prior complaints issue further. Appellants counsel asked for a cautionary instruction, and the trial court agreed to consider the request when the jury instructions conference was held. The jury trial then resumed, and there was no further mention of the prior complaints evidence in the jurys presence.

The issue next came up after the prosecution rested, outside the presence of the jury, when the prosecutor told the trial judge that appellants trial counsel had just handed her two documents that he said intended to introduce into evidence, but that had not been produced in response to the prosecutions standing discovery request. The documents in question were an honor roll certificate for outstanding customer service from the Better Business Bureau, and a certificate attesting that appellants body shop was a member in good standing of the Automotive Service Association. Appellants trial counsel explained that he intended to introduce them to rebut the prior complaints evidence. The trial court ruled that they should have been produced earlier in response to the prosecutions discovery request, and refused to admit them on that ground. Appellants trial counsel then indicated that his client had chosen not to testify. The jury was recalled, and the defense rested without presenting any evidence.

The ensuing colloquy regarding proposed jury instructions was not reported. When the proceedings resumed on the following day, however, before the jury was brought in, the prosecutor asked to put on the record the fact that appellants trial counsel had not wanted the court to give a limiting instruction regarding the prior complaints evidence. Appellants counsel acknowledged that he did not request any special instruction or limiting instruction, because as we discussed yesterday, I think it would just focus in on the unringing of the bell. And because I plan to make a very brief mention of it in my argument. In keeping with this discussion, the trial court did not instruct the jury regarding the prior complaints evidence.

The prosecutor did not refer to the prior complaints evidence in her closing argument. In his closing argument, appellants counsel reminded the jury that they had heard evidence that the investigators had based their operation on complaints, I guess that they had gotten from somewhere. Did you hear any evidence of those complaints? No. In her rebuttal, the prosecutor commented that [t]he complaints you didnt hear about, because the complaints about [appellants] body shop are simply the reason the officers were there. Thats it. And they gave [appellant] the opportunity to commit insurance fraud and thats what he did.

2. Discussion

Appellant contends that the prior complaints evidence was irrelevant, and that its introduction was therefore error. Respondent concedes that the evidence was inadmissible under Evidence Code section 1101, but argues that it was admissible under Evidence Code section 780, subdivision (f), to show the absence of bias on Winklers part. Alternatively, respondent contends that, if erroneously admitted, the admission of this evidence was harmless. We concur in respondents alternative argument that the admission of the prior complaints evidence was harmless error.

As already discussed, there was substantial evidence justifying the jurys guilty verdicts in this case. The existence of the prior complaints was mentioned only briefly, and nothing about the nature of those complaints was revealed to the jury. In her rebuttal argument, the prosecutor emphasized the tangential nature of this evidence, and focused the jurys attention on what appellant did rather than on the reason the investigators chose to visit his shop. For all of the foregoing reasons, we agree with respondent that the admission of the prior complaints evidence was harmless error, and does not constitute grounds for reversing appellants convictions.

D. Ineffective Assistance of Counsel

Appellant contends that his trial counsel was ineffective because he failed to investigate the prior complaints evidence prior to trial, failed to move in limine to exclude it, failed to object to it in a timely fashion, and failed to take the steps necessary to permit him to introduce evidence to rebut it.

To establish ineffective assistance of counsel, a criminal defendant must show not only that counsels representation fell below an objective standard of reasonableness under prevailing professional norms, but also that counsels deficient performance was prejudicial, i.e., that there is a reasonable probability that, but for counsels error, the result of the proceeding would have been different. (Strickland v. Washington (1984) 466 U.S. 668, 687, 694; People v. Scott (1997) 15 Cal.4th 1188, 1211-1212.) [P]rejudice must be affirmatively proved; the record must demonstrate a reasonable probability that, but for counsels unprofessional errors, the result of the proceeding would have been different. A reasonable probability is a probability sufficient to undermine confidence in the outcome. [Citation.] (People v. Bolin (1998) 18 Cal.4th 297, 333, quoting Strickland v. Washington, supra, 466 U.S. at p. 694; see also People v. Ledesma (1987) 43 Cal.3d 171, 217-218.) Moreover, [i]f it is easier to dispose of an ineffectiveness claim on the ground of lack of sufficient prejudice, which we expect will often be so, that course should be followed. (Strickland v. Washington, supra, 466 U.S. at p. 697.)

Thus, in the present case, even if we were to accept appellants contention that trial counsels performance fell below professional standards,[8] appellant would still face the hurdle of demonstrating that he was prejudiced by counsels poor performance. This he cannot do. All of appellants contentions about his trial counsels alleged shortcomings are related to the issue of the prior complaints evidence. We have already determined, however, that the introduction of this evidence was harmless error. Thus, even if trial counsel should have taken steps to prevent the evidence from being introduced, and even if there were shortcomings in his response to it, these issues cannot warrant reversal of the judgment.

Disposition

The judgment is affirmed.[9]

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Ruvolo, P. J.

We concur:

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Reardon, J.

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Rivera, J.

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Analysis and review provided by Carlsbad Property line attorney.

[1] At the same time, Gees colleague, Vera Villareal, sat inside the car operating another device that recorded Gees conversation onto an audio CD. Due to background noise, however, the CD recording proved to be of little probative value, and was not introduced into evidence at trial.

[2] All further unspecified statutory references are to the Penal Code.

[3] Section 550 was adopted in 1992 as a reenactment, without change, of former Insurance Code section 1871.1. (Stats. 1992, ch. 675,  8; see People v. Booth (1996) 48 Cal.App.4th 1247, 1252, fn. 2.) The complaint originally included an additional count, charged as count one, for violation of section 550, subdivision (a)(1). This charge was dismissed prior to trial, leaving counts two (the section 550(a)(5) charge) and three (the section 550(b)(1) charge) as the ones on which appellant went to trial.

[4] Appellant also points out that the estimate he prepared for the entire repair was less than the Bureau of Automotive Repairs own estimate for the covered damage alone. This may be true, but the point is irrelevant. The fact that a body shop quotes an unusually low fee to repair damages covered by insurance does not make it any less fraudulent for that shop to include the cost of uninsured repairs in the claim, along with the insured ones.

[5] Section 550(a)(5) provides that: (a) It is unlawful to do any of the following, or to aid, abet, solicit, or conspire with any person to do any of the following:  [] . . . (5) Knowingly prepare, make, or subscribe any writing, with the intent to present or use it, or to allow it to be presented, in support of any false or fraudulent claim. Section 550(b)(1) provides that: (b) It is unlawful to do, or to knowingly assist or conspire with any person to do, any of the following:  []  (1) Present or cause to be presented any written or oral statement as part of, or in support of or opposition to, a claim for payment or other benefit pursuant to an insurance policy, knowing that the statement contains any false or misleading information concerning any material fact.

[6] On cross-examination, Winkler testified that he had been the lead investigator for this investigation.

[7] For convenience, we will refer to this testimony, and the related testimony on cross-examination, as the prior complaints evidence.

[8] Normally, an ineffective assistance of counsel claim is more appropriately brought on habeas corpus than on direct appeal, because  the appellant record ordinarily does not show the reasons for defense counsels actions or omissions . . . .  (People v. Lucero (2000) 23 Cal.4th 692, 728.) In this case, however, the record includes several colloquies between counsel and the court, including an oral motion for mistrial, during which appellants trial counsel explained in some detail why he proceeded as he did. Therefore, this record is sufficient to permit the ineffective assistance of counsel claim to be decided on direct appeal. (See generally People v. Fosselman (1983) 33 Cal.3d 572, 582-583.)

[9] As already noted, appellant was given a suspended sentence on each of the two counts of which he was convicted, conditioned on his successful completion of probation on the section 550(a)(5) count. At our request, the parties filed supplemental letter briefs addressing the question whether section 654 required that the trial court stay, rather than suspending, appellants sentence on the section 550(b)(1) count. Appellant contends that because both convictions arose out of the same conduct, section 654 applies. (See, e.g., People v. Davey (2005) 133 Cal.App.4th 384, 389; People v. Hawkins (1961) 196 Cal.App.2d 832.) Respondent does not dispute that section 654 would apply if appellant had not been given a suspended sentence, but argues that when the imposition of sentence is suspended, the defendant has not been punished for the purpose of section 654.

Respondents point is well taken. (See, e.g., People v. Wittig (1984) 158 Cal.App.3d 124, 137 [where [i]mposition of sentence was suspended[, and] defendant was granted probation as to each offense . . . . there [was] no double punishment issue].) Nonetheless, in the event appellant does not successfully complete his probation, the trial court will need to take section 654 into account if and when it considers imposing the previously suspended sentence. (See ibid. [The section 654 issue should be presented to a court upon any future attempt to impose a double punishment . . . in the event of a probation violation.].)