P. v. McQueen

Filed 1/30/07 P. v. McQueen CA6

NOT TO BE PUBLISHED IN OFFICIAL REPORTS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 This opinion has not been certified for publication or ordered published for purposes of rule 8.1115.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

SIXTH APPELLATE DISTRICT

I. INTRODUCTION

Defendant William McQueen represented himself as a licensed contractor to COPE Centro Familiar (COPE), a non-profit organization that provides childcare to economically disadvantaged families. COPE contracted with defendant to construct a daycare center and preschool classrooms. An investigation of the construction projects revealed that defendant did not have a contractors license and was using another contractors license number. Defendant subsequently pleaded no contest to one felony count of fraudulent use of a contractors license number in violation of Business and Professions Code section 7027.3. The trial court placed defendant on probation for five years on the condition that he serve 180 days in county jail and pay victim restitution of $680,406.

On appeal, defendant contends that the restitution order must be reversed because (1) there is no credible evidence to support the amount of $62,698 included in the restitution order to reimburse COPE for costs incurred in attempting to complete the construction projects; (2) the trial court erred in failing to allow an offset of $178,670; and (3) trial counsel was ineffective in failing to make a proper evidentiary showing with respect to the offset claim.

For reasons that we will explain, we find no merit in defendants contentions and therefore we will affirm the judgment.

II. FACTUAL AND PROCEDURAL BACKGROUND

A. Factual Background

While doing business as McQueen Engineering, defendant contracted with COPE to perform work on two separate construction projects. In January 2001, defendant entered into a contract to design and construct modular classrooms adjacent to Starlight Elementary School (the Starlight project). In June 2002, defendant entered into a contract for renovation of an existing daycare center in Watsonville (the Renovation project).

COPE intended to use a licensed contractor because the Starlight project was funded by the California Department of Education and the Renovation project was funded by the Packard Foundation. Defendant held himself out as a licensed contractor and included a contractors license number on his letterhead.

In December 2002, a childcare facilities analyst employed by County of Santa Cruz inspected the two COPE projects. The County analyst determined that the Starlight project was about 60 percent complete, with some poor workmanship and noncompliance with approved architectural plans. The Renovation project was determined to be complete, although there were problems with workmanship.

In December 2003, COPE complained to a district attorney investigator that COPE had made payments to defendant for the Starlight project, but the project had not been completed and defendant had not paid the manufacturer for the modular buildings that had been delivered to the site. During the course of the district attorneys investigation, it was discovered that the contractors license number that defendant was using during his work for COPE was actually the license number of Ron Perez, a former business associate of defendant. The investigation also revealed that over a million dollars had been deposited into defendants bank accounts during 2001 and 2002, but defendant had not filed a state income tax return during those years. Some of the funds had been transferred to other businesses that appeared to be owned by defendant.

Before July 2004, the modular buildings that had been delivered to the Starlight project site were repossessed by the manufacturer due to lack of payment. In the same month, a stop work order was issued to McQueen Engineering.

B. The No Contest Plea

On March 17, 2004, a complaint was filed that charged defendant with five felonies, including fraudulent use of a contractors license (Bus. & Prof. Code,  7027.3; counts 1, 2); diversion of construction funds (Pen. Code, 484b; count 3); and unlawful failure to file an income tax return with intent to evade payment (Rev. & Tax. Code, 19706; counts 4, 5). The complaint also included a special allegation that defendant had intentionally taken, damaged and destroyed property of a value in excess of $150,000 (Pen. Code, 12022.6, subd. (b).)

The preliminary hearing was held on February 14, 2005. Defendant was held to answer on all counts. However, the trial court made no holding order as to the special allegation under Penal Code section 12022.6, subdivision (b). The information filed February 23, 2005, alleged the same five counts as the complaint but omitted the special allegation.

Defendant subsequently entered into a plea agreement. On August 11, 2005, defendant pleaded no contest to count 1, fraudulent use of a contractors license (Bus. & Prof. Code, 7027.3) on or about January 15, 2001. In exchange, the remaining counts were to be dismissed and the indicated sentence included no immediate state prison, probation for up to five years, imposition of a restitution fine and victim restitution, and consideration of all counts in determining restitution. The parties also stipulated to a factual basis for the plea, as follows: Mr. McQueen used a contractors license number that was not his in his negotiations with [COPE] and his correspondence and representations to [COPE].

C. Sentencing and Restitution

In connection with the sentencing and restitution hearing, a probation report was filed on December 5, 2005, which noted that COPE sought restitution of $2,984,644, as set forth in the documents submitted in a separate attachment on November 30, 2005.[1] The probation report recommended that defendant pay victim restitution in an amount to be determined by the court.

Prior to the hearing, the parties filed sentencing memoranda regarding their positions on victim restitution. The People argued that victim restitution should equal the payments defendant had received from COPE, which totaled $617, 708, plus interest. The basis for the Peoples argument was Business and Professions Code section 7031, subdivision (b). That section provides: Except as provided in subdivision (e) [the good faith exception], a person who utilizes the services of an unlicensed contractor may bring an action in any court of competent jurisdiction in this state to recover all compensation paid to the unlicensed contractor for performance of any act or contract. (Bus. & Prof. Code, 7031, subd. (b).) According to the People, Business and Professions Code section 7031, subdivision (b), should apply in the context of criminal restitution because the victims recovery of all compensation paid to the unlicensed contractor would satisfy the legislative intent that restitution compensate the victim for the loss caused by the defendants criminal conduct and deter future criminal conduct.

In his sentencing memoranda, defendant asserted that he was entitled to a set off for monies that COPE owed him for labor and materials because he had substantially performed under his contracts with COPE. Additionally, defendant claimed that he had not finished the COPE projects because COPE had failed to make payments, including payments for the modular buildings for the Starlight project. To reimburse COPE for the payments that COPE did make to defendant would, in his view, constitute a windfall to COPE.

At the sentencing and restitution hearing held on January 27, 2006, the parties entered into a number of stipulations. First, the parties agreed that if defendant testified, he would say that he had substantially completed site and design work on the COPE projects. Defendant would also admit that he never had a contractors license. Second, the parties agreed that the spreadsheet and exhibits that the People had submitted with their sentencing memorandum, in support of their initial claim for restitution in the amount of $617,708, would be made part of the evidence at the sentencing and restitution hearing.

The People also submitted, at the time of the hearing, documentation to support their claim for restitution in the additional amount of $62,698. Defendant stipulated that if COPE witnesses were called they would say that they incurred these additional costs as a result of the state the project was in. The People explained that the additional amount of $62,698 would reimburse COPE for charges incurred from February 26, 2003 through September 13, 2005, in an attempt to complete the Starlight project in the face of defendants substandard and noncompliant work. The People also asserted that the Starlight project was not completed because the state refused to further fund the project.

The Peoples showing also included an impact statement by Cilila Ramirez, the program director for COPE. Ramirez stated that COPE was facing closure as a result of defendants actions, including his failure to pay the subcontractor for the modular buildings. When the subcontractor repossessed the modular buildings, COPE was not able to house their program in an adequate facility or meet the childcare service requirements of COPEs agreement with the state Department of Education. Ramirez further stated that defendants actions also caused COPE to lose its ability to pursue additional funding from the state Department of Education and to lose credibility and status in the community that COPE serves. She estimated the financial loss caused by defendants actions was substantially more than the approximately $617,000 paid to him by COPE.

During argument, defense counsel conceded that COPE had paid defendant approximately $617,000, as stated in the Peoples documentation. However, defense counsel contended that defendant was entitled to an offset of $298,523 for the services he performed and the materials he purchased pursuant to his contracts with COPE, as set forth in the list of payments defendant submitted at the time of the hearing.

At the conclusion of the hearing, the trial court announced its sentencing orders. Defendant was placed on probation for five years, conditioned upon, among other things, a county jail sentence of 180 days and payment of victim restitution in the amount of $680,406.

III. DISCUSSION

Defendant filed a timely notice of appeal from the order of victim restitution. He contends that the restitution order must be reversed because (1) there is no credible evidence to support the amount of $62,698 included in the restitution order to reimburse COPE for costs incurred in attempting to complete the construction projects; (2) the trial court erred in failing to allow an offset of $178,670; and (3) trial counsel was ineffective in failing to make a proper evidentiary showing with respect to the offset. We will first address the law of restitution and the standard of review that govern our determination of the issues raised by defendant.

A. Restitution and the Standard of Review

Under article I, section 28 of the California Constitution, victims have a right to restitution for financial losses. (Cal. Const., art. I, 28, subd. (a); People v. Carbajal (1995) 10 Cal.4th 1114, 1122.) This constitutional mandate is implemented by Penal Code section 1202.4,[2] which provides in pertinent part: (a)(1) It is the intent of the Legislature that a victim of crime who incurs any economic loss as a result of the commission of a crime shall receive restitution directly from any defendant convicted of that crime. ( 1202.4; People v. Mearns (2002) 97 Cal.App.4th 493, 498.)

Pursuant to subdivision (f) of section 1202.4, the sentencing court is required to order restitution in a dollar amount sufficient to fully reimburse the victim for economic losses, based on the amount of loss claimed by the victim or any other showing made to the court. However, [t]here is no requirement that the restitution order be limited to the exact amount of the loss in which the defendant is actually found culpable, nor is there any requirement the order reflect the amount of damages that might be recoverable in a civil action. (People v. Carbajal, supra, 10 Cal.4th at p. 1121.)

We review the trial courts order of restitution under the abuse of discretion standard. (People v. Keichler (2005) 129 Cal.App.4th 1039, 1045.) While the trial court has broad discretion, the trial court must 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. (People v. Thygesen (1999) 69 Cal.App.4th 988, 992.) Thus, where there is a factual and rational basis for the amount of restitution ordered by the trial court, the court does not abuse its discretion. (People v. Mearns, supra, 97 Cal.App.4th at p. 499.)

B. The Restitution Amount of $62,698

Defendant concedes that pursuant to Business and Professions Code section 7031, [s]ince [he] was convicted of working without a contractors license, he was subject to repaying most, if not all, of the monies given to him by COPE. However, defendant contends that the trial court abused its discretion in including $62,698 in the restitution order to reimburse COPE for costs that it claims to have incurred in attempting to complete the construction projects. According to defendant, was no credible evidence to support COPEs claim that defendant was responsible for these additional costs because his work was substandard and noncompliant. To the contrary, defendant asserts that his architectural design work was performed satisfactorily, that his plans had been approved, and that the site work for the Starlight project had been substantially completed.

Moreover, defendant believes that COPE was responsible for the repossession of the modular buildings, since COPE had paid him only $495,000 out of an agreed price of $1.21 million for the Starlight project and therefore COPE had sufficient funds to pay for the modular buildings. Finally, defendant argues that because the restitution amount of $617,708 includes reimbursement of COPEs payments for his design work, he should not be required to pay for the design work to be done again by someone else.

The People respond that the trial court did not abuse its discretion in including the amount of $62,698 in the restitution order because COPE incurred that amount as a direct result of defendants fraudulent misrepresentation that he was a licensed contractor. In the Peoples words, [o]nce the poor workmanship and lack of completion of the projects caused an investigation, [defendant] was unable to complete the Starlight project because he was not a licensed contractor. According to the People, defendants inadequate plans and workmanship caused COPE to incur additional costs in an ultimately unsuccessful attempt to salvage the Starlight project. Further, the People assert that their evidentiary showing was sufficient because the amount of $62,698 for additional costs was supported by a spreadsheet and canceled checks, as well as the representation that these costs were claimed by COPE.

The question before us is whether there is a factual and rational basis for the amount of restitution ordered by the trial court. (People v. Mearns, supra, 97 Cal.App.4th at p. 499.) For several reasons, we find that there is sufficient basis for the trial court to order victim restitution in the amount of $62,698 in addition to the amount of $617,708 that defendant concedes.

First, we reiterate that section 1202.4, subdivision (f), requires the restitution order to be based on the amount of loss claimed by the victim or victims or any other showing to the court. ( 1202.4, subd. (f); People v. Fulton (2003) 109 Cal.App.4th 876, 885.) At the time of the sentencing and restitution hearing in the present case, the People sought restitution in the total amount of $680,406 on behalf of the victim, COPE, and the trial court subsequently ordered restitution in that amount. Therefore, the trial court properly based its restitution order on the amount of loss claimed by the victim.

Second, we emphasize that section 1202.4, subdivision (f)(3) mandates restitution in a dollar amount that is sufficient to fully reimburse the victim or victims for every determined economic loss incurred as the result of the defendants criminal conduct. ( 1202.4, subd. (f)(3); People v. Fulton, supra, 109 Cal.App.4th at p. 885.) While defendant vigorously disputes COPEs claim that it incurred additional costs in the amount of $62,698 as a result of defendants fraudulent use of a contractors license number, it is not our task to make an independent determination of the merits of COPEs claim.

As an intermediate appellate court, we are limited to a determination of whether there is any substantial evidence, contradicted or uncontradicted, to support the trial courts findings. [Citation.] [Citation.] (People v. Keichler, supra,129 Cal.App.4th at p. 1045.) Moreover, we are mindful that sentencing judges are given virtually unlimited discretion as to the kind of information that they can consider and the source from whence it comes. [Citation.] (People v. Baumann (1985) 176 Cal.App.3d 67, 81.)

Here, the trial court determined that the additional amount of $62,698 was necessary to fully reimburse COPE for the economic loss it suffered as a result of defendants criminal conduct. We find that substantial evidence supports the trial courts determination. The People submitted documents supporting COPEs claim that it expended additional funds in its attempt to complete the project after defendant was no longer able to work on the Starlight project following discovery of his unlicensed status. These documents included a detailed list of expenditures and cancelled checks. Furthermore, defendant stipulated at the time of the restitution hearing that if COPE witnesses were called that they would say that they incurred these additional costs as a result of the state the project was in. COPEs project director also stated in her victim impact statement that defendants actions caused COPE to be unable to complete the Starlight project.

Based on this evidence, we find that there was a factual and rational basis for the trial courts inclusion of the additional amount of $62,698 in its restitution order, as requested by the victim, COPE. Accordingly, we conclude that the trial courts restitution order does not constitute an abuse of discretion.

C. The Requested Offset of $178,670

At the time of the sentencing and restitution hearing, defendant requested an equitable offset of $298,523 from $617,708, the amount of restitution ordered to reimburse COPEs payments to him. Defendant indicated that the offset should be based on the labor and materials that he had supplied to COPE. The trial court did not allow any offset.

On appeal, defendant argues that the trial court erred in failing to allow an offset in the amount of $178,670, rather than the amount of $298,523 claimed at the restitution hearing. The basis for the offset claim of $178,670 is defendants contention that prior to 2001, when subdivision (b)[3]was added to Business and Professions Code section 7031 (Stats. 2001, ch. 226,  1), case law permitted an unlicensed contractor to assert an equitable offset for labor and materials provided under an illegal contract. (See, e.g., S & Q Construction Co. v. Palma Ceia Development Organization (1960) 179 Cal.App.2d 364, 367.) Defendant further asserts that he is entitled to an offset in the amount of $178,670 because COPE paid him $189,170 prior to September 24, 2001, the effective date of the amendment adding subdivision (b) to Business and Professions Code section 7031. Defendant calculates the offset of $178,670 by subtracting $10,500 for portable units from the pre-September 24, 2001, payments totaling $189,170.

Defendant further argues that the offset is required under the rule prohibiting ex post facto penalties, citing People v. Frazer (1999) 21 Cal.4th 737, 756.) In his view, prior to the September 2001 amendment of Business and Professions Code section 7031 to add subdivision (b), he was entitled to assert an equitable offset; therefore, to deprive him of an offset for work performed prior to September 2001 would violate the ex post facto law by imposing a penalty after the act was done. Defendant further asserts that an equitable offset is warranted on the ground that COPEs actual damages were far less than the amount of restitution awarded because defendant had completed more than sixty percent of the Starlight project at a value of $430,716.

However, defendant does not cite any authority for the proposition that a defendant convicted of fraudulent use of a contractors license number in violation of Business and Professions Code section 7027.3 is absolutely entitled to an equitable offset for labor and materials supplied prior to September 24, 2001 against the award of victim restitution. We decline to adopt such a rule in light of the well established rules applicable to victim restitution.

As the People correctly note, there is no requirement that the restitution order reflect the amount of damages that might be recoverable in a civil action. (People v. Carbajal, supra, 10 Cal.4th at p. 1121; People v. Akins (2005) 128 Cal.App.4th 1376, 1382.) Thus, [a] trial court is not required to determine what damages might be recoverable in a civil action but may instead use any rational method of fixing the amount of restitution which is reasonably calculated to make the victim whole. . . . [Citation.] People v. Goulart (1990) 224 Cal.App.3d 71, 83.) Consequently, whether defendant may assert an equitable offset in a civil action, pursuant to former Business and Professions Code section 7031 and related case law, is not relevant to our review of the trial courts order of restitution.

As we have discussed, under the applicable standard of review we are concerned only with the question of whether there is a factual and rational basis for the amount of restitution ordered by the trial court. (People v. Mearns, supra, 97 Cal.App.4th at p. 499.) We have determined that a sufficient basis exists for the trial courts restitution order in the amount of $680,406. Accordingly, we reject defendants contention that the trial court abused its discretion in failing to allow an equitable offset of $178,670.

D. Ineffective Assistance of Counsel

Alternatively, defendant contends that the restitution order must be reversed due to ineffective assistance of counsel. Because trial counsel failed to seek an offset for completed design work, in addition to the costs incurred by defendant for materials, labor and subcontractors, and there could be no legal or tactical basis for the omission, defendant maintains that trial counsel was ineffective.

It is axiomatic that to prevail on an ineffective assistance of counsel claim, the defendant must show that (1) counsels performance fell below a standard of reasonable competence and (2) prejudice resulted. (People v. Anderson (2001) 25 Cal.4th 543, 569; Strickland v. Washington (1984) 466 U.S. 668, 687-688.) Thus, [e]ven where deficient performance appears, the conviction must be upheld unless the defendant demonstrates prejudice, i.e., 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.   [Citations.] (People v. Anderson, supra, 25 Cal.4th at p. 569.) In the present case, defendant has not attempted to establish prejudice. He fails to explain how a sufficient evidentiary showing by trial counsel with regard to his equitable offset claim would have resulted in the trial court allowing the requested offset. Moreover, as discussed above, we have found no legal basis for the proposition that a defendant convicted of fraudulent use of a contractors license number in violation of Business and Professions Code section 7027.3 is absolutely entitled to an equitable offset against victim restitution for work performed prior to September 24, 2001, under an illegal contract. Trial counsel therefore cannot be deemed ineffective for failing to pursue an equitable offset claim in the manner defendant argues on appeal.

For these reasons, we reject defendants claim of ineffective assistance of counsel.

IV. DISPOSITION

The judgment is affirmed.

_______________________________________________________

Bamattre-Manoukian, ACTING P.J.

WE CONCUR:

__________________________

MCADAMS, J.

_________________________

DUFFY, J.

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[1]The separate attachment of November 30, 2005, was not included in the record on appeal.

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

[3]Business and Professions Code, section 7031, subdivision (b), provides, Except as provided in subdivision (e), a person who utilizes the services of an unlicensed contractor may bring an action in any court of competent jurisdiction in this state to recover all compensation paid to the unlicensed contractor for performance of any act or contract.

Subdivision (e) of Business and Professions Code section 7031 provides, The judicial doctrine of substantial compliance shall not apply under this section where the person who engaged in the business or acted in the capacity of a contractor has never been a duly licensed contractor in this state. However, notwithstanding subdivision (b) of Section 143, the court may determine that there has been substantial compliance with licensure requirements under this section if it is shown at an evidentiary hearing that the person who engaged in the business or acted in the capacity of a contractor (1) had been duly licensed as a contractor in this state prior to the performance of the act or contract, (2) acted reasonably and in good faith to maintain proper licensure, (3) did not know or reasonably should not have known that he or she was not duly licensed when performance of the act or contract commenced, and (4) acted promptly and in good faith to reinstate his or her license upon learning it was invalid.