P. v. McCawley

Filed 5/19/06  P. v. McCawley CA4/1

NOT TO BE PUBLISHED IN OFFICIAL REPORTS

California Rules of Court, rule 977(a), prohibits courts and parties from citing or relying on opinions not certified for publication or ordered published, except as specified by rule 977(b).  This opinion has not been certified for publication or ordered published for purposes of rule 977.

COURT OF APPEAL, FOURTH APPELLATE DISTRICT

DIVISION ONE

STATE OF CALIFORNIA

            APPEAL from an order of the Superior Court of San Diego County, Kenneth  K. So, Judge.  Affirmed.

            Matthew C. McCawley appeals from an order of restitution in the amount of $105,120 entered following his guilty plea to one count of grant theft of personal property (Pen. Code, §  487, subd.  (a)).^[1]  The guilty plea included a waiver of McCawley's rights under People v. Harvey (1979) 25 Cal.3d 754, 758 (Harvey), which allowed the trial court to consider 26 dismissed counts of grand theft of personal property for purposes of sentencing and restitution.^[2]  

            As we will explain, we conclude that the trial court did not abuse it discretion in setting the amount of the restitution order, and accordingly, we affirm.

I

FACTUAL AND PROCEDURAL BACKGROUND

            McCawley was a practicing attorney from 1996 to 2003.  At least 27 of his clients complained to the State Bar that they had paid McCawley to perform work on their behalf, but that McCawley did not do the work and refused to return the payments.  A warrant was issued and McCawley was arrested.  McCawley pled guilty to one count of grand theft of personal property (§  487, subd.  (a)) for taking money from his clients in excess of $400, and he entered a Harvey waiver with respect to 26 additional counts of grand theft involving 26 other clients  The trial court placed McCawley on formal probation for five years under the condition, among others, that he pay direct victim restitution pursuant to section  1202.4, subdivision  (f).

            The amount of restitution was set at a formal restitution hearing.  The prosecutor presented evidence showing that 27 clients paid McCawley specific sums of money to represent them in connection with disability retirement claims before various state and local agencies.  The prosecutor's evidence consisted of excerpts from the report of the State Bar investigator, which contained a summary of the claims against McCawley by each of the 27 clients and, in most of the cases, engagement letters between McCawley and the clients.

            As shown by the prosecutor's evidence, the clients made upfront payments of a flat fee to cover McCawley's representation through the conclusion of a specific portion of the application or appeal process regarding their disability benefits.  In none of the 27 cases did the clients agree to pay McCawley on an hourly basis.  McCawley testified that he ceased performing work on his clients' matters after receiving the retainer payments because he developed neurological problems and other medical conditions.  The amount of restitution sought by the prosecutor for each of the 27 clients ranged from $500 to $8,500, for a total of over $100,000.

            McCawley argued to the trial court that the restitution award with respect to nine of the victims  -- Richard Miller, Cheryl Miraglia, Betty Weiss, Frank Neal, Steve Leu, Sally Lopez, Tracey Kroot, Robbin Patterson and Erica Weger-Manos  -- should be offset on a quantum meruit basis because he had provided some legal services to them, even though he did not complete the matter for which he was retained.  Defense counsel argued, " .  .  .  McCawley .  .  . performed services entitling him to at least a portion of his fee.  Under the concept of quantum meruit, .  .  . McCawley is entitled to the reasonable value of the services he did render.  [S]uch duly performed services could be considered as an offset against the amount of restitution awarded."  

            In support of his claim for an offset with respect to the nine victims, McCawley testified that he charged for his time and his associates' time at the rate of $250 per hour, and that he charged for his staff's time at the rate of $125 per hour.  Defense counsel elicited testimony from McCawley about the work his firm performed for each of the nine victims, with McCawley referring to a computer printout from his office to refresh his recollection.^[3]  The evidence adduced at the restitution hearing showed the following about the partial representation provided by McCawley to the nine victims:

            (1)             Miller paid $8,500 for McCawley to represent him in an administrative hearing, but McCawley did not complete the matter.  McCawley testified that his firm devoted one-half hour of staff time and one-half hour of attorney time to the matter, and that the restitution award should thus be offset by $187.50. 

            (2)             Miraglia paid $3,500 for McCawley to represent her through the initial decision on her application for benefits, but McCawley did not complete the matter.  McCawley testified that the restitution award should be offset by $625 for three hours of staff time and one hour of attorney time.  

            (3)             Weiss paid $3,000 for McCawley to represent her through the initial decision on her application for benefits, but McCawley did not complete the matter.  McCawley testified that the restitution award should be offset by $312.50 for one-half hour of staff time and one hour of attorney time.

            (4)             Neal paid $3,000 for McCawley to represent him through the initial decision on his application for benefits, but McCawley did not complete the matter.  McCawley testified that the restitution award should be offset by $625 for three hours of staff time and one hour of attorney time.

            (5)             Leu paid $3,250 for McCawley to represent him through the initial decision on his application for benefits, but McCawley did not complete the matter.  McCawley testified that the restitution award should be offset by $562.50 for two and a half hours of staff time and one hour of attorney time.           

            (6)             Lopez paid $2,000 for McCawley to represent her through the initial decision on her application for benefits, but McCawley did not complete the matter.  McCawley testified that the restitution award should be offset by $809.50 for an unspecified amount of staff time and one hour of attorney time.

            (7)             Patterson paid McCawley $4,000 to pursue retroactive payments after a successful resolution of her disability matter, but McCawley did not complete the matter.  McCawley testified that the restitution award should be offset by $125 for one hour of staff time.  

            (8)             Kroot paid $6,500 for McCawley to represent her in an administrative appeal of the denial of her application for benefits, but McCawley did not complete the matter.  McCawley testified that the restitution award should be offset by $1,250 for four hours of staff time and three hours of attorney time.

            (9)             The State Bar investigator's summary regarding Weger-Manos indicated that she paid $5,000 at the request of McCawley because he told her that he needed it before he would appear at a hearing.  When McCawley stopped working on her case, Weger-Manos had to represent herself at the hearing.  The prosecutor thus sought $5,000 in restitution for Weger-Manos.  McCawley gave a different explanation for the $5,000 paid by Weger-Manos.  He testified that he obtained a favorable writ of mandate for Weger-Manos from the superior court, reversing an administrative decision, for which Weger-Manos had agreed to pay him on a contingency fee basis.  He testified that after the favorable result, Weger-Manos asked him to renegotiate the contingency fee to $5,000; he agreed, and she sent him a check for $5,000.  McCawley claimed that Weger-Manos should not be provided any restitution for the $5,000, because it was a payment for the favorable result on the writ of mandate.  McCawley based his testimony, in part, on a computer printout showing the work he performed on the matter.  Upon further examination of the computer printout at trial, McCawley noted that it did not show that he had attended a hearing on the writ, and that his personal recollection of the matter was " conflicting" with some of the data in the computer printout.  He stated that he would have to look at the hard copy of his file, which he did not have, to know why there were discrepancies.

            The trial court denied McCawley's claim for an offset with respect to each of the nine victims, and ordered McCawley to pay victim restitution in the total amount of $105,120.^[4]  The trial court explained, " A lot depends on whether or not the work that was done by the law firm is effective and helpful.  Since this is an equitable issue, I'm weighing and balancing.  And in some of these cases, when these clients had to go looking for lawyers  -- went to the office and found that nobody was there  -- those are some of the facts that the court is considering in weighing the amount of restitution in all of these cases."  

            McCawley appeals from the restitution order, arguing that the restitution award should have been offset by the reasonable value of the work performed.  His appellate briefing takes issue with the trial court's decision to refuse an offset for the value of the services rendered to Miraglia, Weiss, Neal, Leu, Lopez, Kroot and Weger-Manos.^[5] 

II

DISCUSSION

            Victim restitution is provided for by article  I, section  28, subdivision  (b) of the California Constitution, which provides that " [r]estitution shall be ordered from the convicted persons in every case, regardless of the sentence or disposition imposed, in which a crime victim suffers a loss, unless compelling and extraordinary reasons exist to the contrary.  .  .  ."   Implementing this constitutional provision, section  1202.4, subdivision  (b) provides that " [i]n every case where a person is convicted of a crime, the court shall impose a separate and additional restitution fine, unless it finds compelling and extraordinary reasons for not doing so, and states those reasons on the record."  

            At issue here is the statutory provision directing how the trial court is to determine the amount of restitution.  According to statute, the restitution order " shall be of a dollar amount that is sufficient to fully reimburse the victim or victims for every determined economic loss incurred as the result of the defendant's criminal conduct."   (§  1202.4, subd.  (f)(3), italics added.)  " '  "   'A victim's restitution right is to be broadly and liberally construed.' "   '  "   (People v. Keichler (2005) 129 Cal.App.4th 1039, 1045.)  Section 1202.4 " requires the award be set in an amount which will fully reimburse the victim for his or her losses unless there are clear and compelling reasons not to do so."  (People v. Rowland (1997) 51 Cal.App.4th 1745, 1754.)

            " A trial court's determination of the amount of restitution is reversible only if the appellant demonstrates a clear abuse of discretion."   (People v. Akins (2005) 128 Cal.App.4th 1376, 1382.)  " [T]he trial court is vested with broad discretion in setting the amount of restitution; it may '  " use any rational method of fixing the amount of restitution which is reasonably calculated to make the victim whole  .  .  .  ."   ' "   (People v. Tucker (1995) 37 Cal.App.4th 1, 6.)  Accordingly, " [n]o abuse of discretion is shown simply because the order does not reflect the exact amount of the loss, nor must the order reflect the amount of damages recoverable in a civil action.  [Citation.]  In determining the amount of restitution, all that is required is that the trial court 'use a rational method that could reasonably be said to make the victim whole, and may not make an order which is arbitrary or capricious.'  [Citations.]  The order must be affirmed if there is a factual and rational basis for the amount."   (Akins, at p. 1382.)  We will not reweigh evidence, and accordingly, " [i]f there is some evidence to support the court's ruling, disputed or not, we will affirm the court's order."   (Rubics, supra, 136 Cal.App.4th at p.  462.)  

            In setting the amount of restitution, " [o]nce the record contains evidence showing the victim suffered economic losses .  .  .  , this showing establishes the amount of restitution the victim is entitled to receive, unless challenged by the defendant.  In that event, the burden shifts to the defendant.  .  .  .  This approach complies with the statutory mandate that the amount of restitution is to be based on the 'loss claimed by the victim' and the designated right of the defendant to a hearing 'to dispute the determination of the amount of restitution.' "   (People v. Fulton (2003) 109 Cal.App.4th 876, 886, citations omitted [addressing shifting of burden to determine whether attorney fees incurred by victim related to recovery of economic or noneconomic loss, and thus were a proper subject of restitution].)^[6]

            In this case, the record contains evidence of the amounts paid to McCawley by his clients.^[7]  McCawley did not dispute that he received the payments and failed to return them.  Evidence of these payments constitutes prima facie evidence of an out-of-pocket economic loss by McCawley's clients.  Thus, the burden shifted to McCawley to establish that the clients did not suffer an economic loss in the full amount of their payment. 

            Based on McCawley's testimony, the factual issue for the trial court was whether the limited amount of work McCawley performed for some of his clients served to reduce their out-of-pocket economic loss.  The trial court decided that because the clients still had to pay other lawyers to perform the task that McCawley had agreed to perform in return for the flat fee they paid, the clients suffered an economic loss in the full amount of their payment to McCawley.  McCawley did not submit any evidence showing that the work he performed in any way reduced the amount that the clients ended up having to pay another lawyer to handle the matters they had paid McCawley to handle to completion.  In light of the evidence in the record, we conclude that the trial court had a factual and rational basis for its determination of the amount of restitution to be paid by McCawley, and thus did not abuse its discretion in setting restitution at the full amount of the clients' payments.^[8]

            McCawley argues that because the trial court did not reduce the restitution award under the principle of quantum meruit, the trial court abused its discretion by failing to apply relevant legal standards.  Under the theory of quantum meruit, a discharged attorney may, in some circumstances, bring an action against a client to recover the reasonable value of legal services performed before the discharge, even when the attorney is dismissed for cause.  (See Fracasse v. Brent (1972) 6 Cal.3d 784, 792 [holding that " an attorney discharged with or without cause is entitled to recover the reasonable value of his services rendered to the time of discharge" ].)  Thus, if this was a civil action brought by McCawley's clients against him to recover their retainer payments, McCawley could conceivably bring a cross-complaint under a theory of quantum meruit to attempt to offset some of his liability based on the fact that he had performed some legal services.  McCawley argues that in this restitution proceeding, the trial court should have applied the same principle to reduce the restitution award by the amount that McCawley could have recovered as an offset from his clients in a civil proceeding under a theory of quantum meruit. 

            We conclude that the trial court was not required to apply the concept of quantum meruit in setting the amount of restitution.^[9]  The potential offset to civil liability available to a perpetrator of a crime in a civil proceeding has no bearing in a proceeding for victim restitution.  As our Supreme Court has stated, " [t]here is no requirement the restitution order .  .  . reflect the amount of damages that might be recoverable in a civil action."   (People v. Carbajal (1995) 10 Cal.4th 1114, 1121; see also People v. Bernal (2002) 101 Cal.App.4th 155, 162 [" the amount ordered as restitution need not mirror what a victim might obtain in a civil action" ].)  Instead, the trial court must exercise its discretion to set the amount of restitution by fully compensating the victims for all economic loss.  " [T]he primary purpose of victim restitution is to fully reimburse the victim" (Bernal, at p. 168), and the trial court is required only to " 'use a rational method that could reasonably be said to make the victim whole.' "   (People v. Hudson (2003) 113 Cal.App.4th 924, 927.)  The trial court accordingly, did not err in declining to apply the principle of quantum meruit to reduce the restitution award.

III

DISPOSITION

            The restitution order is affirmed.

IRION, J.

WE CONCUR:

McCONNELL, P. J.

  O'ROURKE, J.

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^[1]           All further statutory references are to the Penal Code unless otherwise indicated.

^[2]             Harvey, supra, 25 Cal.3d 754, 758, held that a court could not consider the facts and circumstances of a dismissed count as part of a plea bargain when imposing sentence.  A waiver of that principle, as part of a plea bargain, is referred to as a Harvey waiver, allowing the court to consider the dismissed counts for purposes of sentencing and restitution.  (See People v. Ozkan (2004) 124 Cal.App.4th 1072, 1074.)  Further, " in imposing restitution as a condition of probation, '[a] court may also consider [in imposing victim restitution] crimes which were charged but dismissed [citation]; uncharged crimes, the existence of which is readily apparent from the facts elicited at trial [citation]; or even charges of which the defendant was acquitted, if justice requires they be considered.  [Citation.]' "   (People v. Rubics (2006) 136 Cal.App.4th 452, 459 (Rubics).)

^[3]             McCawley did not have his client files because the State Bar had seized them.

^[4]           The record indicates that Miraglia paid $3,500 to McCawley, but the trial court ordered restitution in the amount of $3,350.  It is not clear from the record why the trial court reduced the restitution sought on behalf of Miraglia by $150.

^[5]           The appellate briefing does not mention the offset sought as to Miller or Patterson.  As the restitution awards to those two victims are not challenged on appeal, our analysis does not address them.

^[6]             Further, " the standard of proof at a restitution hearing is by a preponderance of the evidence, not proof beyond a reasonable doubt."   (People v. Baker (2005) 126 Cal.App.4th 463, 469.)

^[7]           We note that it was proper for the trial court to rely on the information contained in the excerpts from the report by the State Bar investigator and the attached engagement letters to establish the amount of restitution.  " [A] hearing to establish the amount of restitution does not require the formalities of other phases of a criminal prosecution."   (People v. Foster (1993) 14 Cal.App.4th 939, 947.)  Thus, the trial court may, for instance, rely on information contained in a probation officer's report, and " [a] property owner's statements in the probation report about the value of her property should be accepted as prima facie evidence of value for purposes of restitution."   (Id. at p. 946; see also §  1203.1d, subd.  (d) [providing that in a proceeding to establish the amount of restitution, documentary evidence shall not be excluded as hearsay evidence].)  " [T]he defendant must come forward with contrary information to challenge that amount."   (Foster, at p. 947.)

^[8]           As for the Weger-Manos matter, the trial court was entitled to credit the evidence in the record indicating that the $5,000 was paid for ongoing legal services that Weger-Manos did not receive (as Weger-Manos reported to the State Bar), rather than for an already-earned contingency fee (as McCawley testified).  In light of the fact that the computer records relied on by McCawley did not corroborate his recollection that the $5,000 was for an earned contingency fee, the trial court was well within its discretion to reject McCawley's testimony.  Indeed, McCawley's appellate brief concedes that " insufficient evidence established [McCawley]'s claim that he attended the writ hearing on the Weger-Manos case," for which he claimed he earned the contingency fee.  We thus conclude that the trial court did not abuse its discretion in awarding $5,000 in restitution to Weger-Manos based on the economic loss she incurred when, as the trial court apparently found, she paid $5,000 for the future provision of legal services that she did not receive.

^[9]           We need not and do not decide whether there would be any factual or legal basis for McCawley to prevail against his clients in a civil action under a theory of quantum meruit.  Thus, we do not address whether there is any merit to McCawley's argument, citing Maglica v. Maglica (1998) 66 Cal.App.4th 442 and Earhart v. William Low Co. (1979) 25 Cal.3d 503, that under a theory of quantum meruit in a civil action, " a failure to provide the requesting party with a beneficial result does not negate or diminish the reasonable value of the service" and bar recovery in quantum meruit.  We also do not address whether, if the principle of quantum meruit applied here, McCawley's hourly rate would determine the reasonable value of his services.