Opinion
A23-0131
09-26-2023
David Matthew Johnson, petitioner, Appellant, v. State of Minnesota, Respondent.
Hennepin County District Court File No. 27-CR-18-733
Considered and decided by Johnson, Presiding Judge; Cochran, Judge; and Halbrooks, Judge. [*]
ORDER OPINION
Jeanne M. Cochran Judge
BASED ON THE FILE, RECORD, AND PROCEEDINGS, AND BECAUSE:
1. Appellant David Matthew Johnson challenges the district court's order denying his motion to vacate a restitution order. Because the district court did not err, we affirm.
2. On January 9, 2018, respondent State of Minnesota charged Johnson with seven counts of theft-by-swindle of property or services from Allina Health (Allina). The complaint alleged that Johnson, who was a vice president with Allina, submitted false expense reports and misused the company credit card, resulting in losses to Allina totaling over $770,000 between 2004 and 2017. Due to a five-year statute of limitations, the charges against Johnson were limited to Johnson's alleged fraudulent activities between 2013 and 2017, resulting in losses to Allina totaling $296,265.60. Johnson pleaded guilty to four counts of theft-by-swindle in exchange for a guidelines sentence of "45 months executed." He also agreed to pay restitution to Allina as part of his sentence. The state dismissed the remaining three counts.
3. On June 6, 2018, the district court sentenced Johnson to the presumptive guidelines sentence of 45 months' imprisonment and ordered Johnson to pay $296,265.60 in restitution to Allina. The district court noted in its sentencing order that it would reduce the amount of restitution to $250,000, the amount of Allina's insurance policy deductible, if Allina's "insurance pays the claim."
4. During 2004 to 2017, Allina had an insurance policy that provided coverage for "Crime Protection and Employee Dishonesty." Allina submitted a claim to its insurer for $756,857.65 for losses incurred because of Johnson's actions. The insurer paid $506,857.65, leaving Allina responsible for its $250,000 deductible. After the insurer paid Allina's claim, the insurer filed a civil lawsuit against Johnson exercising its subrogation rights "to all causes of action in an amount in excess of $756,857.65." In July 2020, Johnson and the insurer, as subrogee for Allina, entered into a confidential, stipulated settlement agreement to resolve the claims.
5. On March 5, 2022, Johnson completed his executed prison sentence. Shortly thereafter, the district court referred Johnson's unpaid restitution debt to the Minnesota Department of Revenue (DOR) for collections. By a letter dated, March 14, 2022, DOR informed Johnson of the amount due and notified him that he could request a contested case hearing. The notice specified that a request for a hearing must be postmarked within 45 days. Based on the record before us, it does not appear that Johnson requested a contested-case hearing.
6. On April 22, 2022, Johnson filed a motion in district court to vacate the restitution order, arguing that his restitution obligation to Allina was satisfied as a matter of law when he settled the civil lawsuit with Allina's insurer. According to Johnson, "[u]nder the law of subrogation, Allina no longer owned nor was it entitled to receive the restitution" because "Allina's right to receive restitution was passed to [the insurer]" when the insurer asserted its subrogation rights. The state opposed Johnson's motion, arguing that the "$250,000 is still an outstanding out-of-pocket loss directly related to the offense and is, therefore, appropriate to remain as an outstanding [r]estitution [o]rder in the criminal case."
7. In November 2022, the district court issued an order reducing the amount of restitution owed to $250,000, the deductible amount, in accordance with the original sentencing order. But the district court denied Johnson's motion to vacate the restitution order. The district court found that "[t]he [s]ettlement [a]greement in the related civil case does not contemplate satisfaction of the restitution ordered against [Johnson] in favor of Allina." The district court also found that the insurer, as subrogee for Allina, sought to recover the policy payment it made to Allina but that it "did not attempt to recover the deductible payment made by Allina." The district court further noted that Allina was not a party to the civil lawsuit.
8. In this appeal, Johnson argues that the district court erred because the settlement agreement entered into by Johnson and Allina's insurer discharged Johnson's restitution obligation to Allina. The state argues, for the first time on appeal, that the district court lacked subject-matter jurisdiction to vacate the restitution order after Johnson's prison sentence expired. See Martinek v. State, 678 N.W.2d 714, 718 (Minn.App. 2004) (citing State v. Purdy, 589 N.W.2d 496, 498-99 (Minn.App. 1999)); see also State v. Hannam, 792 N.W.2d 862, 865 (Minn.App. 2011). Alternatively, the state argues that the district court did not abuse its discretion in denying Johnson's motion to vacate the restitution order because the settlement agreement did not absolve Johnson of his obligation to pay restitution to Allina for its out-of-pocket losses.
9. Litigants often, for the first time on appeal, assert that an argument implicates an issue of subject-matter jurisdiction. But when, as here, a party's challenge to the decision below lacks substantive merit, it is unnecessary for the appellate court to determine whether the district court lacked subject-matter jurisdiction to consider the argument. See Briles v. 2013 GMC Terrain, 907 N.W.2d 628, 632 n.2 (Minn. 2018) (expressing no opinion on subject-matter jurisdiction given resolution of the case on other grounds). This appeal may be resolved on the merits without considering whether the district court had subject-matter jurisdiction to consider Johnson's motion to vacate because the district court properly denied the motion.
10. "A victim of a crime has the right to receive restitution as part of the disposition of a criminal charge." Minn. Stat. § 611A.04, subd. 1(a) (2022). "The primary purpose of the [restitution] statute is to restore crime victims to the same financial position they were in before the crime." State v. Palubicki, 727 N.W.2d 662, 666 (Minn. 2007). But a decision for or against restitution "is not a bar to any civil action by the victim," although "[t]he offender shall be given credit, in any order for judgment in favor of a victim in a civil action, for any restitution paid to the victim for the same injuries for which the judgment is awarded." Minn. Stat. § 611A.04, subd. 3 (2022).
Because the restitution statute has remained unchanged throughout the relevant time periods, the current version of the statute is referenced in this opinion.
11. Based on our review of the record, the district court correctly determined that the settlement agreement between Johnson and Allina's insurer did not release Johnson from his court-ordered obligation to pay restitution to Allina for its deductible. Allina was not a party to the settlement agreement reached by Johnson and Allina's insurer, and the settlement agreement did not include recovery of Allina's deductible. Regardless of the settlement between Johnson and Allina's insurer, it remains true that, as a result of Johnson's swindle, Allina incurred an out-of-pocket loss in the amount of the deductible on its insurance policy. See State v. Boettcher, 931 N.W.2d 376, 380-81 (Minn. 2019) (discussing standard for determining whether a loss is a "result" of a crime for purposes of restitution as "losses that are directly caused by, or follow naturally as a consequence of, the defendant's crime"). The district court did not err by denying Johnson's motion to vacate his restitution obligation to Allina for its deductible.
IT IS HEREBY ORDERED:
1. The district court's order is affirmed.
2. Pursuant to Minn. R. Civ. App. P. 136.01, subd. 1(c), this order opinion is nonprecedential, except as law of the case, res judicata, or collateral estoppel.
[*] Retired judge of the Minnesota Court of Appeals, serving by appointment pursuant to Minn. Const. art. VI, § 10.