Opinion
No. 21655-1-III.
Filed: April 13, 2004. UNPUBLISHED OPINION
Appeal from Superior Court of Spokane County. Docket No: 01-1-03176-8. Judgment or order under review. Date filed: 12/13/2002. Judge signing: Hon. Neal Q Rielly.
Counsel for Appellant(s), Dustin Douglass Deissner, Deissner Law Firm PLLC, 1707 W Broadway Ave, Spokane, WA 99201-1817.
Counsel for Respondent(s), Kevin Michael Korsmo, Attorney at Law, 1100 W Mallon Ave, Spokane, WA 99260-2043.
Based on considerable circumstantial evidence, a Spokane jury convicted Phillip Kim of first degree arson. The primary issue on appeal is whether the superior court erred when it allowed the jury to hear evidence of Mr. Kim's questionable financial practices for the purpose of showing he was in serious financial trouble at the time his grocery store burned. The State correctly argues the evidence was appropriate under ER 404(b) to show motive. Additionally, we reject contentions of error under ER 408 and CrR 3.5. No other grounds exist to reverse. Accordingly, we affirm.
FACTS
About 9:30 p.m. on December 17, 2001, the Spokane Valley Fire Department responded to a fire at the Picasso Market. On arrival, the firemen found all the outside entry doors locked. They forcibly entered and contained the fire, which was ultimately determined to have been started by someone lighting accelerants in three different locations within the building.
Spokane Valley Fire Department Investigator Paul Chase went to business owner Phillip Kim's home in Liberty Lake at about midnight to notify him about the fire. Mr. Kim related he closed the market himself at 9:00 p.m. The next morning at 10:00 a.m., Mr. Kim met with Deputy Fire Marshall Kevin Miller and an agent of the Bureau of Alcohol, Tobacco, and Firearms, Lance Hart, for an `owner interview,' which the officers described as a standard practice in business fires. Report of Proceedings (RP) at 261. Deputy Miller testified the Department brought in ATF to assist in its investigation of the fire.
At the close of the interview, Deputy Miller arrested Mr. Kim for first degree arson, based upon the evidence at the scene establishing that the fire had been set and the doors then locked, Mr. Kim's statement that he had left the store only one-half hour before the fire was reported, and Mr. Kim's admissions in the interview about his adverse financial situation.
Eric Younger, an ATF forensic auditor, testified at Mr. Kim's trial. He described his arson-for-profit investigation. Mr. Younger reviewed business documents seized from Mr. Kim. Based upon those documents, he suggested subpoenas for other documents, such as Mr. Kim's letters to creditors, lease agreements, etc. He interviewed various people who had business relationships with Mr. Kim. Mr. Younger used this information to create a timeline depicting Mr. Kim's finances. He used March 31, 1997, the date Mr. Kim and his wife filed for bankruptcy, as the starting point.
The 1997 bankruptcy involved $182,558.90 in unsecured claims, including $44,750.30 in unpaid business taxes. The bankruptcy court granted the discharge on July 24, 1997. On November 30, 1998, Mr. Kim financed the purchase of two 1993 International trucks to use in a trucking business. The two trucks were eventually repossessed. Other trucks Mr. Kim used in the business were not in his name. The business ended in 1999 when Mr. Kim moved to Spokane and purchased the grocery store. The repossessed trucks were eventually sold for about $20,000, but Mr. Kim still owed $37,000 for them.
Mr. Kim financed part of the supermarket purchase with about $37,000 that he received when he and his wife refinanced their home in Mukilteo. The new mortgage on the Mukilteo residence was for $256,500 at 10.55 percent interest and monthly payments of $2,355.90. Mr. Kim assumed a $150,000 loan the previous owner of the supermarket owed to his seller, Dean Benson, payable at about $1,300 per month. In addition, Mr. Kim signed a seven year lease with Mr. Benson, who also owned the building the market occupied, with rent payments of $1,600 per month. Mr. and Mrs. Kim purchased a home at Liberty Lake three months after Mr. Kim purchased the market, and financed the home by a $218,000 loan, payable at $2,063.72 per month.
In obtaining the home loan, Mr. Kim represented he earned a higher monthly income than was reflected in his 1998 income tax return, which reported an adjusted gross income of $10,364. The loan application shows the Kims had owned the supermarket for three years. Two days after the Kims obtained financing to purchase their Liberty Lake home, the Kims and Mr. Kim's father signed a four-year lease with Chesterfield Financial Corporation for freezer equipment for the market for $1,609.27 per month.
Meanwhile, the State of Washington was investigating the fact that another married couple was making the mortgage payments on the Mukilteo home, but the Kims had not reported any sale of the residence. According to the Kims, the transfer of the home to the new people residing there had been a gift. The State responded that it required proof the Kims were actually the ones making the payments, and if the Kims were not able to provide such proof by November 15, 2001, then the State would assess them $6,142.31 in excise tax. After the supermarket fire, Mr. Younger looked into this matter and discovered that the new couple was not living there and Mr. Kim had listed the house for sale.
In October 2000, a new Safeway store opened near the Picasso Market. Mr. Kim cited competition from the Safeway store as a reason for his request in February 2001 for a three-month extension on his equipment lease with Chesterfield Financial. In February, the State issued a notice of tax warrant for past due sales taxes of $9,034.20 owed by Mr. Kim. He signed an agreement with the Department of Revenue to make payments of $2,900 per month toward back taxes. Mr. Kim's first payment on this agreement was returned for insufficient funds. In March, Mr. Kim still had not paid Chesterfield, and Chesterfield accelerated the payments and amount due, calling for $62,037.08 by March 22, 2001.
On July 30, 2001, a default judgment of $4,305.89 was entered against Mr. Kim in an action by Samsar ATM Company. The next day, the Spokane County Treasurer sent the Kims a notice of delinquent real estate taxes on their Liberty Lake home for $7,991.36. On September 14, 2001, the Washington Department of Revenue issued another tax notice calling for a total of $17,559.10.
Employee Edward Beldin and customer James Matthew Gordon testified Mr. Kim was not ringing up sales on the register, but charged the customer sales tax. Mr. Beldin testified Mr. Kim instructed him to do this as well. Both men testified near this time Mr. Kim began leaving items on the shelves past their expiration dates. Mr. Beldin admitted Mr. Kim paid him `under the table.' RP at 565. He testified Mr. Kim had told him he needed $1,600 per day in receipts to break even. Mr. Beldin estimated receipts were totaling about $1,100 per day.
On September 15, 2001, Mr. Kim wrote a letter to Mr. Benson asking for payment arrangements on his past due rent. On October 10, 2001, Mr. Kim agreed to pay approximately $200,000 as a property settlement to his wife in the dissolution of their marriage, or, if that amount was not forthcoming, he agreed to sell all the community property and pay his wife 80 percent of the proceeds. On October 11, 2001, Mr. Kim filed the dissolution action, and in it he listed $546,000 in liabilities and the Liberty Lake home and the supermarket as the couple's only assets. On October 14, 2001, the Kims listed their home for sale for $239,000, about $8,000 less than their mortgage.
Mr. Kim failed to make his lease payments to Chesterfield Financial in October and November. Had he sold the business at that time, his payoff to Chesterfield would have been $49,543.12. On November 29, 2001, Mr. Kim sought and obtained a quote from Washington Inventory Service to inventory the store. Mr. Younger questioned the timing on the inventory because such inventories are usually done at the end of the year or after a business sale.
The next day, a temporary insurance binder for the market was issued. The previous coverage was for $370,000 for the building and $225,000 for the business personal property. The new coverage was for $490,000 for the building and $380,000 for the personal property. Mr. Kim had advised the insurance agent that the increase was to cover the cost of a line of shoes he was offering for sale at the market. But the inventory done on December 2, 2001 by Washington Inventory Service valued the inventory at only $285,299, with the shoes accounting for $86,852 of that amount.
In his defense, Mr. Kim presented the testimony of business associates and accountants. He attempted to show his financial situation was not as poor as depicted because he was involved in several developing enterprises from which he expected to make a significant amount of money.
On December 3, 2001, Mr. Kim left for Korea. He returned on the afternoon of December 17; the fire occurred later that evening. At trial, customer Sonja Brostrom confirmed Mr. Kim's admission that he was alone at the market at closing time, less than one-half hour before a neighbor noticed the fire and called 911.
The jury convicted Mr. Kim of first degree arson. Mr. Kim appeals.
ANALYSIS A. ER 404(b) Evidence
The issue is whether the trial court abused its discretion when, to establish a motive for arson it admitted under ER 404(b) evidence of Mr. Kim's prior conduct showing he was in serious financial trouble.
ER 404(b) provides that `[e]vidence of other crimes, wrongs, or acts is not admissible to prove the character of a person in order to show action in conformity therewith. It may, however, be admissible for other purposes, such as proof of motive, opportunity, intent, preparation, plan, knowledge, identity, or absence of mistake or accident.'
In his opening brief, Mr. Kim alleges the court improperly admitted the following evidence as proof of motive under ER 404(b):
a) Mr. Kim's tour bus business declared bankruptcy in 1997.
b) Mr. Kim's trucking business failed.
c) Mr. Kim was delinquent in paying taxes and wrote an insufficient funds check to pay back taxes.
d) The Kims eventually divorced, and he agreed to a property settlement in which he would either pay his ex-wife $152,000 or sell the community property. (Mr. Kim contends the court admitted testimony he yelled at his wife, but failed to provide supporting citation to the record.)
e) Mr. Kim sold his house in Mukilteo, but reported it as a gift for excise tax purposes.
f) Mr. Kim's home loan application stated he had owned the store for three years. At the time of the application, he had owned it for only 3 months. He did not list the Mukilteo home on his loan application.
g) Mr. Kim sold out-of-date products in his store.
h) Mr. Kim cheated on sales tax collection.
The State argues most of the above evidence does not involve `bad acts or other misconduct' and was admissible as relevant to the question of whether Mr. Kim had a motive to set the fire.
In considering Mr. Kim's motion to exclude, the court regarded the financial evidence as highly probative of whether Mr. Kim had a motive to commit arson. The court did not believe the prejudicial effect of this evidence outweighed its probative value. It reserved ruling on the admissibility of evidence that Mr. Kim yelled at his wife in front of customers, kept out of date merchandise on the shelf, and failed to ring up sales tax on the store's register. The latter two subjects were admitted into evidence, but we could not find any testimony heard by the jury regarding Mr. Kim yelling at his wife.
The superior court's decision to admit evidence of other crimes or misconduct is reviewed for abuse of discretion. State v. Pirtle, 127 Wn.2d 628, 648, 904 P.2d 245 (1995), cert. denied, 518 U.S. 1026 (1996). But, in exercising its discretion, the superior court must find by a preponderance of the evidence that the misconduct occurred; determine that the evidence is relevant to a material issue; state on the record the purpose for which the evidence is being introduced; and balance the probative value of the evidence against the danger of unfair prejudice. State v. Burkins, 94 Wn. App. 677, 687, 973 P.2d 15 (1999) (citing State v. Brown, 132 Wn.2d 529, 571, 940 P.2d 546 (1997)).
Here, Mr. Kim's argument is limited to whether the prejudicial effect of this evidence outweighed any probative value. The evidence is both probative and prejudicial. It supported the State's theory that Mr. Kim had a motive to commit arson, but it also depicted Mr. Kim as having a fraudulent nature, thereby making it more likely he would make a fraudulent insurance claim. On balance, although a close question, we cannot say the trial court abused its discretion when it decided in favor of admission.
Moreover, any error was harmless. "An evidentiary error which is not of constitutional magnitude, such as erroneous admission of ER 404(b) evidence, requires reversal only if the error, within reasonable probability, materially affected the outcome." State v. Everybodytalksabout, 145 Wn.2d 456, 468, 39 P.3d 294 (2002) (quoting State v. Stenson, 132 Wn.2d 668, 709, 940 P.2d 1239 (1997)). The other evidence overwhelmingly pointed to Mr. Kim as the perpetrator. He was the last person at the scene, leaving less than one-half hour before the fire was reported. The store was locked and secure when the firemen arrived. Mr. Kim's financial situation was dire. And, Mr. Kim had recently insured the contents of the store for more value than the inventory supported.
B. ER 408 Evidence
The issue is whether the trial court abused its discretion in admitting evidence of Mr. Kim's efforts to restructure or reduce debt payments, in light of ER 408 restrictions against admitting evidence of compromise.
ER 408 provides that:
Evidence of . . . furnishing or offering or promising to furnish . . . a valuable consideration in compromising or attempting to compromise a claim which was disputed as to either validity or amount, is not admissible to prove liability or invalidity of the claim or its amount. Evidence of conduct or statements made in compromise negotiations is likewise not admissible. . . . This rule . . . does not require exclusion when the evidence is offered for another purpose, such as proving bias or prejudice of a witness, negating a contention of undue delay, or proving an effort to obstruct a criminal investigation or prosecution.
(Emphasis added.)
Mr. Kim argues the following evidence violated ER 408:
a) A letter he wrote to Dean Benson, in which he requested an extension of time to pay the rent on the store building.
b) A letter he wrote to the Department of Revenue to set up a repayment plan.
c) A letter he wrote to the Liquor Control Board requesting a reduction in a penalty assessment.
d) A letter he wrote to Chesterfield Financial requesting an extension of time to make payments on the new freezers.
e) An agreement to pay his wife a certain sum as a property settlement pursuant to the dissolution of their marriage.
The superior court decided ER 408 did not apply because `[t]his criminal case has nothing to do with the claims that are at issue behind exhibits being proffered. . . . The purpose of this rule is to prevent use of these statements to encourage settlement of disputes, not to prevent the use of these statements for matters unrelated to the disputes.' RP at 206. We agree.
ER 408 applies to evidence that a party offered consideration in compromise of a claim `which was disputed as to either validity or amount.' (Emphasis added.) Under ER 408, such evidence `is not admissible to prove liability for or invalidity of the claim or its amount.' (Emphasis added.) The evidence cited by Mr. Kim, above, was admitted to show he knew people were expecting to be paid and, therefore, had a motive to set the fire; the evidence was not admitted to prove that he was liable for these debts.
Division One of the Court of Appeals recently considered whether ER 408 applied in criminal trials. State v. O'Connor, 119 Wn. App. 530, 81 P.3d 161 (2003). Although the facts are distinguishable, the court noted that `[w]hether ER 408's prohibition against admitting evidence of compromise of civil claims applies at criminal trials based on the same conduct is an issue of considerable debate around the country, and one that has not heretofore been addressed by Washington appellate courts.' Id. at 532. (Emphasis added.) The court concluded that `the policies favoring settlement of civil claims that underlie ER 408 do not require exclusion of compromise evidence at trials for criminal offenses that are not themselves subject to compromise.' Id. at 532-33.
The O'Connor analysis is helpful here, because it considered the issue in the context of the policy underlying ER 408. The policy is one that favors and encourages settlement, and has no application to the evidence in Mr. Kim's case.
C. Statement Admissibility
The issue is whether the trial court erred in deciding Mr. Kim was not in custody when he made statements to law enforcement officers the day after the fire and allowed the statements in evidence under CrR 3.5.
At the CrR 3.5 hearing, Deputy Fire Marshall Kevin Miller testified it is standard practice to interview the owner after a suspected arson fire. Thus, he asked Mr. Kim to meet him at the Spokane Valley Fire Department at 10:00 a.m. the morning following the fire, for that purpose. Before the interview, Deputy Miller contacted federal agent Lance Hart of the Bureau of Alcohol, Tobacco and Firearms to assist him. Deputy Miller testified that the Spokane Valley Fire Department typically requests ATF assistance in cases involving larger losses. At that point, no decision had been made to arrest Mr. Kim; it depended on what developed in the interview.
Deputy Miller testified he did not advise Mr. Kim that he was not under arrest and could leave. Nor did he hear Agent Hart so advise Mr. Kim, but Deputy Miller also testified he was in and out of the room that morning and Agent Hart did the actual questioning. Agent Hart testified he advised Mr. Kim at the beginning of the interview of the same things he advises all building owners in this type of situation. Specifically, he testified he told Mr. Kim that he did not have to answer any question, he was free to go at any time, and he was not under arrest.
Mr. Kim testified he was fatigued at the time of the interview. He believed he had no choice but to appear at the interview that morning. The interview took place in an office-sized room with the door closed and lasted three hours. According to Mr. Kim, no one advised him that he did not have to answer the questions. Instead, Agent Hart told him that he could `put me away 20 or 30 years,' and would `request two or three million dollars bond.' RP at 315. At some point during the interview, he asked to talk to his attorney, but another thirty minutes had elapsed before he was given an opportunity to call his lawyer. He then declined to answer any more questions.
Deputy Miller testified in rebuttal that all questions stopped once Mr. Kim requested an attorney.
The superior court entered the following findings of fact:
7. Agent Hart conducted the interview in a conference room in Station # 3 with Agent Xiong and at times, Deputy Fire Marshall Kevin Miller [was] present.
8. The Defendant was not advised of his full constitutional rights during any of the discussions with fire personnel or Agent Hart.
Clerk's Papers (CP) at 8. The court entered Conclusion of Law 3, as follows:
With regard to the business owner interview of the Defendant by Agent Hart on December 18, 2001, the Defendant was not in custody and had been advised by Agent Hart that he was not under arrest and he was free to leave. The Defendant was not threatened, nor coerced by fire personnel or ATF agents. The Defendant was not incapacitated by fatigue such that his statements were not voluntary.
CP at 9.
Both Agent Hart and Deputy Miller testified at Mr. Kim's trial. Agent Hart testified that Mr. Kim told him that he was having financial problems, that his home was in foreclosure, that he was in serious financial condition with regard to the business, that he was behind in his lease payments for the building and in payments for equipment, and that he had $200,000 to $300,000 in insurance on the business under a policy that he had recently renewed. Deputy Miller corroborated Agent Hart's testimony.
This court recently discussed the test for admissibility of allegedly non-custodial, non-Mirandized statements. See State v. Solomon, 114 Wn. App. 781, 788, 60 P.3d 1215 (2002), review denied, 149 Wn.2d 1025 (2003). Regarding such statements, no Washington case had yet cited Thompson v. Keohane, 516 U.S. 99, 112-13, 116 S.Ct. 457, 133 L.Ed.2d 383 (1995) (holding whether a defendant is in custody is a mixed question of fact and law).
Solomon interpreted Thompson as clarifying that the custody inquiry is more complex than whether the suspect reasonably believed he was in custody. The latter test was the one articulated in State v. Short, 113 Wn.2d 35, 41, 775 P.2d 458 (1989) (citing Berkemer v. McCarty, 468 U.S. 420, 442, 104 S.Ct. 3138, 82 L.Ed.2d 317 (1984)). The proper inquiry requires `first an exploration of the historical facts and then, relying on those facts, an objective determination of the defendant's view of his or her situation.' Solomon, 114 Wn. App. at 788 (citing Thompson, 516 U.S. at 112-13); see also 12 Royce A. Ferguson, Jr., Washington Practice, Criminal Practice and Procedure sec. 3307, at 772 n. 5 (1997). The superior court's conclusions of law address whether a reasonable person in the defendant's situation would believe that "he or she was not at liberty to terminate the interrogation and leave." Id. at 789 (quoting Thompson, 516 U.S. at 112).
Here, the superior court found that Agent Hart advised Mr. Kim that he was not under arrest and was free to leave, that no one threatened or coerced Mr. Kim, and that Mr. Kim was not incapacitated by fatigue. These are historical facts. The superior court then concluded that Mr. Kim was not in custody at the time of the owner interview and answered questions voluntarily.
We review de novo the court's conclusion that Mr. Kim was not in custody. Our focus is whether the trial court applied the correct legal standard to the unchallenged historical facts. Objectively, a person in the defendant's situation would believe he was free to leave. Objectively, a person who is told by officers that he is free to leave and does not have to answer questions, who is not coerced or threatened, and who is not overly fatigued should feel free to leave. The superior court therefore properly concluded Mr. Kim was not in custody.
In any event, the superior court's admission of the statements Mr. Kim made during the owner interview, even if error, was harmless beyond a reasonable doubt. See State v. Cunningham, 93 Wn.2d 823, 831, 613 P.2d 1139 (1980). The statements contained nothing that the jury did not hear in the other evidence. The fact he left the store less than one-half hour before the fire was reported was confirmed by the testimony of a customer. And, his finances were the subject of Mr. Younger's testimony. D. Statement of Additional Grounds For Review
Mr. Kim reargues the facts bearing on his financial status, but his statements here are not evidence. He did not testify at trial. We discussed his custodial status concerns in part C of our analysis, and have rejected them.
Affirmed.
A majority of the panel has determined this opinion will not be printed in the Washington Appellate Reports, but it will be filed for public record pursuant to RCW 2.06.040.
SWEENEY, A.C.J. and KURTZ, J., concur.