PEOPLE
v. BUSSER
Filed 7/20/10;
pub. order 7/29/10
(see end of opn.)
COURT
OF APPEAL, FOURTH APPELLATE DISTRICT
DIVISION
ONE
STATE
OF CALIFORNIA
THE PEOPLE,
Plaintiff and Respondent,
v.
SCOTT BUSSER,
Defendant and Appellant.
D055088
(Super. Ct.
No. SCD212032)
APPEAL from
an order of the Superior Court
of San Diego
County, Randa Trapp, Judge.
Reversed.
Scott
Busser appeals an order requiring him to pay restitution to his insurance
carrier after he pleaded guilty to misdemeanor hit and run (Veh. Code,
§ 20002, subd. (a)) and presenting a materially false statement to his
insurance company (Pen. Code,[1] § 550, subd. (b)(1)), a felony. Busser's insurer, Government Employees
Insurance Company (GEICO), paid the repair costs from an accident involving
Busser but later discovered Busser had lied about the circumstances of the
accident. When he lied, Busser violated
the terms of the insurance policy and provided GEICO with grounds to rescind
the contract. However, GEICO would have
been contractually obligated to pay all the repair costs from the collision if
Busser had not lied about the facts of the accident. Thus, Busser's misrepresentation did not
actually induce GEICO to provide coverage where there was none or to pay more
in repair costs than it was otherwise obligated to pay under the contract. Nevertheless, the trial court ordered Busser
to pay restitution to GEICO under subdivision (a)(3)(B) of section 1202.4 for
the repair costs from the accident.[2] We conclude, based on the rule first stated
in People v. Crow (1993) 6 Cal. 4th
952, 962 (Crow), the repair costs
GEICO would have been obligated to pay if Busser had not presented a materially
false statement are not losses resulting from the criminal offense under
section 1202.4 because they are not attributable to Busser's criminal
misrepresentation. Accordingly, we
reverse that part of the trial court's order requiring Busser to reimburse
GEICO for the repair costs arising out of the accident.
FACTUAL
AND PROCEDURAL BACKGROUND
In the
early morning of January 21, 2007,
Busser's car collided with Michael Fuhr's car on the freeway and sped away
rapidly. Fuhr followed Busser's car and
unsuccessfully attempted to get Busser to stop.
However, Fuhr did manage to record Busser's license plate number. The following day, he filed a hit and run
collision report with the California Highway Patrol (CHP). The accident caused about $4,500 in damages
to Fuhr's car, which he repaired through his insurance company, 21st Century
Insurance.
On January
23, Busser reported to GEICO that an unknown vehicle had struck his car while
it was parked in front of his home the previous night. GEICO opened a claim, appraised the damages
to Busser's car, and paid him $2,450.60 for repairs.
Meanwhile, the CHP investigated
Fuhr's hit and run claim and determined the car that hit his car was registered
at Busser's address. On January 25, an
officer mailed a hit and run letter to Busser requesting contact regarding the
accident. Busser never responded to the
letter. The CHP also contacted GEICO
about the hit and run, causing GEICO to reopen Busser's claim and assign it to
the Special Investigations Unit.
GEICO
investigator David McCauley interviewed Busser while investigating the reopened
claim. At first, Busser repeated his
initial statement that the damage to his car occurred while it was parked. Eventually, however, Busser admitted to
McCauley that all of the damage resulted from the collision with Fuhr's car on
January 21. GEICO investigators
ultimately determined Busser was at fault for the collision with Fuhr and
reimbursed 21st Century Insurance $4,553.21 for the amount it paid to repair
Fuhr's car.
Busser was
charged with four offenses arising out of the hit and run accident and the
insurance fraud. Busser pleaded guilty
to misdemeanor hit and run and presenting materially false or misleading
information to his insurance company, a felony.
The remaining charges were dismissed.
The trial court imposed a suspended sentence and granted Busser three
years of formal probation for the felony and denied probation but gave Busser
credit for time served for the misdemeanor.
The trial
court held a restitution hearing
several months after Busser's sentencing.
GEICO requested reimbursement for the repair costs to both cars and the
costs of investigating Busser's claim.
McCauley was the only witness. He
testified to the repair costs and the costs of the GEICO investigation. He also indicated GEICO would have paid for
the damages to both Busser's and Fuhr's cars under the insurance policy if
Busser had been truthful about the facts of the accident from the start. At the hearing, the court awarded GEICO
$7,003.81 for the repair costs to both cars and $1,459.80 for its investigation
into Busser's fraud. Busser timely
appeals the order as it relates to the repair costs. He concedes the trial court properly imposed
restitution for GEICO's investigative costs.
(See People v. Ortiz (1997) 53
Cal.App.4th 791, 797-798.)
DISCUSSION
Busser
argues GEICO should not receive any restitution for the costs of repairing the
damaged cars because his fraud did not actually cause GEICO to pay the repair
costs. We review the trial court's
restitution order for abuse of discretion.
(People v. Thygesen (1999) 69
Cal.App.4th 988, 992.) An order resting
upon a "demonstrable error of law" constitutes an abuse of the
court's discretion. (
577, 581.)
The
California Constitution confers on "all persons who suffer losses as a
result of criminal activity . . . the right to seek and secure restitution from
the persons convicted of the crimes causing the losses they suffer." (Cal.
Const., art. I, § 28, subd. (b)(13)(A).)
The "primary purpose of victim restitution is to fully reimburse
the victim," although restitution also furthers rehabilitative and
deterrent objectives for the defendant and others. (People
v. Bernal (2002) 101 Cal.App.4th 155, 161-162, 168.) In the 1990's, the Legislature consolidated
much of California's restitution
scheme in section 1202.4.[3]
Subdivision (f) of section 1202.4
provides that "in every case in which a victim has suffered economic loss
the court shall require that the defendant make restitution to the victim or
victims . . . ." (Italics
added.) The restitution award amount
must "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.) Thus, restitution not only requires a crime,
a victim, and an economic loss, but the victim must have actually suffered the
economic loss because of the criminal
conduct.
"A
'victim' is a 'person who is the object of a crime . . . .' " (Crow,
supra, 6 Cal.4th 952, 957, quoting
Black's Law Dict. (5th ed. 1979) p. 1405, col. 2).) The California Supreme Court in
"may be the beneficiary of [restitution] if it has incurred actual loss
due to the crime," even though an agency is not a natural person. The Legislature later amended the definition
of "victim" in the restitution statute to include, among other
things, "[a]ny corporation, business trust, estate, trust, partnership,
association, joint venture, government, governmental subdivision, agency, or instrumentality,
or any other legal or commercial entity when that entity is a direct victim of
a crime." (§ 1202.4, subd.
(k)(2).) Courts have since unequivocally
held an insurance company may be entitled to restitution when it is the direct
victim of a crime. (See, e.g.,
967 (O'Casey); People v. Moloy (2000) 84 Cal.App.4th 257 (Moloy).)
Insurance companies that
"suffer[ ] the consequences of crime only by reimbursing the crime-related
losses of their policyholders [do] not reasonably fall within [the] definition
[of direct victims]." (
233.) An insurance company must be
"the real and immediate object of the [defendant's] offenses" to
warrant restitution from the defendant.
(Ibid.) For example, in O'Casey, supra, 88
Cal.App.4th at page 971, the court upheld an order requiring the defendant to
pay restitution to a workers' compensation insurer after the insurer honored
the defendant's false workers' compensation claim and made payments to the
defendant and her medical providers.
Likewise, the court in Moloy,
upheld an order requiring the defendant to pay restitution to defrauded
insurance companies because he deceived the insurers into settling false claims
and the insurers directly bore the losses that flowed from his conduct. In his case, Moloy fraudulently caused car
accidents and then submitted false claims to the motorists' insurance
companies. (Id. at p. 260.) In both
cases, the courts considered the insurance companies direct victims because the
defendants directed their fraud at the insurance companies and induced them to
make payments they otherwise would not have made absent the defendants' frauds.
Here,
Busser intentionally lied to GEICO when he claimed the damage to his car came
from an unknown source. Thus, Busser
directly victimized GEICO because he criminally presented false information to
the company. However, GEICO is not a
direct victim in the same sense as the insurers in O'Casey and Moloy. Whereas those insurers would not have paid
out any money absent the defendants' frauds because there were no other
underlying events triggering coverage, GEICO would have paid the repair costs
from the hit and run accident even if Busser had not lied. (See O'Casey,
supra, 88 Cal.App.4th at p. 971;
GEICO was contractually obligated to assume such risk in exchange for
the premiums paid by Busser. Therefore,
Busser's fraud was not the underlying event that actually resulted in GEICO
providing him with coverage or paying the repair costs from the accident. Consequently, the amount GEICO is entitled to
in restitution is not equal to the entire amount GEICO paid out surrounding the
accident, even though GEICO was a direct victim of Busser's fraud.
The Legislature intended
restitution to "restore the economic status quo" by returning to the
victim " 'funds in which he or she has an ownership interest' "
following a criminal conviction. (
644, 658.) However, "a restitution
order 'is not . . . intended to provide the victim with a windfall. [Citation.]' " (People
v. Millard (2009) 175 Cal.App.4th 7, 28.)
Therefore, "restitution of the victim is only ordered if the victim
suffers economic loss." (
By the plain language of the statute, the victim's economic loss must
come "as a result of the
defendant's conduct."
(§ 1202.4, subd. (f).)
Victims are only entitled to an amount of restitution so as to make them
whole, but nothing more, from their actual losses arising out of the
defendants' criminal behavior. (
790, 795-796.)
In Crow, supra, 6 Cal.4th
952, the Supreme Court determined the basic method for calculating the proper
amount of restitution in welfare fraud cases.
The Crow court upheld an order
requiring the defendant to pay restitution to a county social services
department after he was convicted of aiding and abetting welfare fraud by
concealing his presence in the household of a welfare recipient. (Id.
at pp. 954-956.) When considering the
proper amount of restitution, the court declared: "Any money that the government would
have been obligated to pay had the fraud not occurred is not attributable to
the fraud, and thus is not a 'loss' arising out of the criminal
offense." (Id. at p. 962.) Thus, the
court held "the defrauded agency's 'loss' should be calculated by
subtracting the amount the government would have paid had no acts of fraud
occurred from the amount the government actually paid." (Ibid.) The court's rule ensured the defendant fully
compensated the agency for his fraud, consistent with the requirements of Penal
Code section 1202.4, without providing the agency with an undeserved windfall.
The Crow court's pronouncements on properly calculating a victim's
restitution award apply equally in this case, even though the victim here was
an insurance company rather than a government agency. The amount of GEICO's restitution award must
reflect the actual loss GEICO incurred due to Busser's crime. (See People
v. Fortune, supra, 129
Cal.App.4th at p. 795.) Any money GEICO
would have been obligated to pay had Busser not misrepresented the facts of the
accident is not attributable to his misrepresentation, and thus is not a loss
arising out of his criminal offense as required by section 1202.4. (See Crow,
supra, 6 Cal.4th at page 962; §
1202.4, subd. (f).) McCauley, GEICO's
agent, admitted GEICO would have paid the $7,003.81 in repair costs under the
insurance policy if Busser had not lied about the accident. Thus, applying the Crow method, if we take the $7,003.81 in repair costs GEICO paid
from the accident following Busser's fraud, less the $7,003.81 in repair costs
GEICO would have paid absent Busser's fraud, it leaves no actual loss to GEICO
due to Busser's fraud. Therefore, the
restitution order should not rightfully have included any of the repair costs
from the accident paid by GEICO.
Furthermore, this conclusion is unaffected by GEICO's right to rescind
the parties' insurance contract based on Busser's fraud.
"[R]escission stands as a contract remedy." (People
v. Beaumont Investment, Ltd. (2003) 111 Cal.App.4th 102, 133.) "[A] rescission effectively renders the
[insurance] policy totally unenforceable from the outset so that there was
never any coverage and no benefits are payable." (Imperial
Casualty & Indemnity Co. v. Sogomonian (1988) 198 Cal.App.3d 169,
182.) However, the remedies of
rescission and restitution are distinct.
(Beaumont,
a restitution award is the defendant's conviction for the crime that actually
caused the victim's economic loss.
(§ 1202.4, subd. (f).)
Whether the victim also holds a contractual remedy against the defendant
is irrelevant for the purposes of determining the defendant's restitution
obligation. (See People v. Bernal, supra,
101 Cal.App.4th 155, 162.) The criminal
process should not be " 'used to supplement a civil suit or as a
threat to coerce the payment of a civil liability and thus reduce the criminal
court to a collection agency.' "
(People v. Williams (1966) 247
Cal.App.2d 394, 405.)
Busser's criminal misrepresentation
contractually entitled GEICO to rescind the insurance policy. GEICO may pursue this right in a civil action. However, the fact remains GEICO did not incur
an economic loss from its payment of the accident repair costs as a result of
Busser's criminal misrepresentation. The
accident itself created an existing lawful obligation on the part of GEICO to
pay for the repair costs. We cannot say
whether GEICO should recover these expenditures in a separate action to rescind
the insurance contract, but we can say that a restitution order is not the
proper method of deciding the issue.
DISPOSITION
The portion
of the restitution order requiring Busser to reimburse GEICO $7,003.81 for the
repair costs arising out of the hit and run accident is reversed.
HUFFMAN, Acting P. J.
WE CONCUR:
NARES,
J.
O'ROURKE,
J.
Filed 7/29/10
COURT
OF APPEAL, FOURTH APPELLATE DISTRICT
DIVISION
ONE
STATE
OF CALIFORNIA
THE PEOPLE,
Plaintiff and Respondent,
v.
SCOTT BUSSER,
Defendant and Appellant.
D055088
(Super. Ct.
No. SCD212032)
ORDER CERTIFYING
OPINION FOR PUBLICATION
THE COURT:
The opinion
filed July 20, 2010 is
certified for publication.
The
attorneys of record are:
Henry C.
Coker, Public Defender, Randy Mize, Chief Deputy of Primary Public Defender,
Matthew Braner and Paul Rodriguez, Deputy Public Defenders, for Defendant and
Appellant.
Edmund G.
Brown, Jr., Attorney General, Dane R. Gillette, Chief Assistant Attorney
General, Gary W. Schons, Assistant Attorney General, James D. Dutton and
Sabrina Y. Lane-Erwin, Deputy Attorneys General, for Plaintiff and Respondent.
HUFFMAN, Acting P. J.
Copies
to: All parties
Publication courtesy of California
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Analysis and review provided by Carlsbad Property line Lawyers.
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[1] All
further statutory references are to the Penal Code unless otherwise specified.
[2] The
court also ordered Busser to pay GEICO the costs it incurred to investigate his
fraud. Busser does not contest the
court's order that he repay these investigative costs.
