Opinion
E079273
01-08-2024
THE PEOPLE, Plaintiff and Respondent, v. CRISTIAN LOPEZ-LEON, Defendant and Appellant.
Laura Vavakin, under appointment by the Court of Appeal, for Defendant and Appellant. Rob Bonta, Attorney General, Lance E. Winters, Chief Assistant Attorney General, Charles C. Ragland, Assistant Attorney General, A. Natasha Cortina, Lynne G. McGinnis and Arlyn Escalante, Deputy Attorneys General, for Plaintiff and Respondent.
NOT TO BE PUBLISHED
APPEAL from the Superior Court of San Bernardino County No. FVI18002861 Christopher S. Pallone, Judge. Affirmed.
Laura Vavakin, under appointment by the Court of Appeal, for Defendant and Appellant.
Rob Bonta, Attorney General, Lance E. Winters, Chief Assistant Attorney General, Charles C. Ragland, Assistant Attorney General, A. Natasha Cortina, Lynne G. McGinnis and Arlyn Escalante, Deputy Attorneys General, for Plaintiff and Respondent.
OPINION
RAPHAEL J.
Christian Lopez-Leon appeals from a restitution order directing him to pay $1,015,304.16 in future lost profits to a truck driver injured severely in an accident Lopez-Leon caused by driving while intoxicated. He argues that portion of the restitution order was arbitrary because the court measured the award using gross revenues rather than gross or net profits. We affirm and conclude testimony from the victim and an expert provided evidence sufficient to support the award, and the trial court did not abuse its discretion by basing the award, in part, on a five-year projection of the victim's future revenues.
In a separate order filed concurrently with this opinion we summarily deny the habeas petition in case No. E081106 that Lopez-Leon filed while this appeal was pending.
I
FACTS
In the early morning of July 22, 2018, a truck driver was traveling north in his commercial truck in the number three lane of Interstate 15 at about 55 miles per hour. Unknown to the driver, appellant Christian Lopez-Leon had stopped his vehicle in the lane and sat in it without any lights illuminated. The truck driver saw the stopped vehicle too late and hit it from behind.
A California Highway Patrol officer who responded to the scene of the accident found Lopez-Leon in his car. The officer reported he smelled of alcohol, slurred when speaking, and had bloodshot, watery eyes. The officer found a 12-ounce can of beer in the driver-side door compartment and several empty beer cans around the vehicle. Lopez-Leon admitted to driving just before the collision and admitted he had been drinking. Lopez-Leon's blood alcohol concentration registered at .116 percent at 1:55 a.m. and .115 percent at 1:58 a.m. Later blood tests registered a .096 blood alcohol concentration at 4:21 a.m. and a .073 blood alcohol concentration at 5:21 a.m.
On August 11, 2020, Lopez-Leon pled no contest to misdemeanor driving with an .08 percent blood alcohol content. (Veh. Code, § 23152, subd. (b).) The trial court granted him five years' summary probation and ordered him to complete an alcohol education program.
The prosecution requested victim restitution and argued the victim was entitled to lost profits of $1,055,000, calculated by taking his income from the full calendar year before the accident ($211,000) and assuming he would have had the same income in each of the next five years. At a restitution hearing on March 22, 2021, the victim testified he had been a self-employed truck driver for about seven or eight years. He said he received contracts from a trucking company that paid him for the contracts he completed. His 1099-MISC form from 2017 showed income from the trucking company of $211,481. He said he thought he had earned around $150,000 to $170,000 in 2016 and around $100,000 in 2015, but he could not recall the exact amounts. He said he expected his future income to be higher. "Every year you get better contracts, you become more knowledgeable, you get your truck paid off . . . [a]nd you become better and better at it. So every year it's just been more and more." He said he would have had his truck paid off in a few months, which would have increased his net income by $50,000 a year. On cross-examination, he acknowledged the $211,000 figure on his 1099-MISC form from 2017 reflected "how much [he] got paid by [the trucking company]" and did not reflect "how much [he] actually [took] home in profit" because it did not include his expenses for gasoline and maintenance.
The victim testified that the accident had caused injuries to his lower back, neck, arms, legs, and caused his umbilical hernia to rupture. He still feels pain in his arms and has limited strength in his legs and neck. He also experiences anxiety when he is in a vehicle and has headaches and seizures, for which he takes medication. He said it is difficult for him to sit for long periods, to get up, and to run. He feels pain where he had the hernia operation and constant nerve pain in his legs. He said he has not worked as a truck driver since the accident and according to his physician will be unable to work as a truck driver again. He said he was 47 years old and had anticipated he would continue working as a truck driver until he was 65. He had been unable to earn income from work of any sort since the accident, but he said he was trying to learn how to flip properties, though he had no immediate prospects of earning income from that work.
The prosecution argued an award of gross profits reflects the correct measure to calculate the truck driver's economic injury and that restitution includes loss of future profits. Lopez-Leon pointed out the victim admitted he had substantial expenses that he paid out of his earnings, and argued there was not enough information to determine his take-home income. The court then issued a ruling ordering restitution of medical expenses of $11,942.11, and $111,659.16 for the loss of the truck. However, the court found there was not enough evidence to order restitution for future earnings because the victim had not testified as to the specific amounts he earned in the years before 2017 and denied his request without prejudice.
On July 20, 2021, the prosecution provided the court with 1099-MISC forms showing the victim's earnings from the trucking company for 2015, 2016, and 2018. Together the four forms showed the victim earned $20,000 in 2015, $60,506.31 in 2016, $211,481.15 in 2017, and $138,063.16 in 2018 through July, when the accident occurred. The court ordered the prosecution to call an economic expert to explain the calculation for future earnings and the time-value of money.
On November 9, 2021, Michael Neill, a forensic accountant with the San Bernardino County District Attorney's Office, testified as an expert regarding calculating future earnings and the time-value of money. He reviewed the victim's 1099-MISC financial forms and calculated that the victim lost earnings of $87,000 for the last five months of 2018 after the accident and $211,000 for all of 2019. He testified the victim's expected income over the five years after the accident was $1,055,000, which comes to $211,000 for each full year. Neill testified he could have projected earnings over a longer period, but the prosecution asked him to limit his calculation to five years. He said he used mathematical formulas for calculating the time-value of money to determine the present value of the lost earnings as $1,015,304.16-the amount the victim would need to invest to have $1,055,000 in five years using the conservative rate of return on treasury bills. Neill said he left out of his calculation the Bureau of Labor Statistics' projected increases in earnings of two percent per year for truck drivers, as well as any adjustment for inflation, to make his estimate more conservative.
Treasury bill rates were at historically low levels in 2021. (See Daily Treasury Bill Rates, U.S. Department of the Treasury, https://home.treasury.gov/resource-center/data-chart-center/interest-rates/TextView?type=daily_treasury_bill_rates&field_tdr_date_value=2021, filtered for 2021.) As a result, Neill's calculation produced a significantly lower discount for the time-value of money than he would obtain today. (Compare, Id., filtered for 2023.)
On cross-examination, Neill said he did not use the median national annual income for truck drivers-which was $47,130 in 2020-because the victim was earning much more than that amount. Asked why he had not used the victim's actual income in 2018-$138,000-to project his future earnings, Neill pointed out that the accident occurred seven months into 2018, and the victim's projected income for the full year was $248,241.64, more than his earnings in 2017 and more than Neill ended up projecting.
Lopez-Leon argued using Neill's calculations would provide the victim with a windfall, and that the expert should have averaged the yearly earnings to "get [a] more realistic value for future lost value over five years." Lopez-Leon asked the court to consider the national median annual income for truck drivers. Counsel also argued the victim had not shown if he had earned money since the incident, and that earnings should be "subtracted from the possible future lost income amount." Lopez-Leon emphasized he was bound to a wheelchair, was not working, had no disability or social security insurance, and thus had no ability to pay restitution.
The court determined it was not appropriate to use median earnings as a measure of the victim's earning potential because a median is simply the middle value of a data set, and the victim's earnings in 2017 and the first seven months of 2018 were substantially higher than the median. The court was "satisfied that the present value of the restitution amount is . . . $1,015,304.16." The court ordered the amount of $1,138,905.43 in restitution (including the medical expenses and reimbursement for the truck), plus a statutory 15 percent administrative fee of $170,835.81, for a total of $1,309,741.24. The court ordered Lopez-Leon to pay the restitution of $25 per month, which he indicated was the minimum allowed, and ordered that payment be reflected as a condition of probation.
II
ANALYSIS
Lopez-Leon argues the trial court abused its discretion by calculating the victim's future economic losses as future lost revenues rather than projecting his lost gross or net profits by deducting business expenses from his total income. He asks us to reverse the award and remand for a new hearing on the appropriate amount of restitution.
The parties and the trial court did not use consistent terminology in discussing the victim's income and profits. Generally, they used "gross income" to refer to the victim's revenues and "net income" or "take home" income to refer to his revenues less business expenses. Lopez-Leon argues we should distinguish "revenues," "gross profits," and "net profits," as understood under generally accepted accounting principles, in evaluating the restitution order. While we do not hold courts must adhere to those definitions in conducting restitution hearings, we will use the terms "earnings," "income," or "revenues" to mean gross revenues, "gross profits" to mean total income less direct operating costs, and "net profits" to mean gross profits less additional business, interest, and tax expenses.
"The California Constitution requires courts to order restitution in every case in which a crime victim suffers a loss. (Cal. Const., art. I, § 28, subd. (b)(13)(B).) Statutory provisions implement this constitutional directive. Restitution is 'based on the amount of loss' the victim claims and should 'fully reimburse' the victim for every economic loss the defendant's criminal conduct caused. ([Pen. Code,] § 1202.4, subd. (f).) . . . Lost wages or lost profits due to a victim's injury are compensable. (Id., subd. (f)(3)(D).)" (People v. Grandpierre (2021) 66 Cal.App.5th 111, 115.) "[M]any injured crime victims will lose wages or profits for weeks, months, or possibly years following a restitution hearing." (People v. Giordano (2007) 42 Cal.4th 644, 658 (Giordano).)
At a restitution hearing, the prosecution must prove loss by a preponderance of the evidence. (People v. Gemelli (2008) 161 Cal.App.4th 1539, 1542.) A victim's statement of economic loss is prima facie evidence of loss. (Id. at p. 1543.) "Once the victim makes a prima facie showing of economic losses incurred as a result of the defendant's criminal acts, the burden shifts to the defendant to disprove the amount of losses claimed by the victim. [Citation.] The defendant has the burden of rebutting the victim's statement of losses, and to do so, may submit evidence to prove the amount claimed exceeds" the victim's actual economic losses. (Ibid.)
"While we review all restitution orders for abuse of discretion, we note that the scope of a trial court's discretion is broader when restitution is imposed as a condition of probation." (Giordano, supra, 42 Cal.4th at p. 663 &fn. 7.) The abuse of discretion standard" 'asks in substance whether the ruling in question "falls outside the bounds of reason" under the applicable law and the relevant facts [citations].' [Citation.] Under this standard, while a trial court has broad discretion to choose a method for calculating the amount of restitution, it must employ a method that is rationally designed to determine the surviving victim's economic loss." (Id. at pp. 663-664.) The court need not order the precise amount of loss caused by the crime, but "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 (Thygesen), abrogated on another ground by People v. Birkett (1999) 21 Cal.4th 226; see also People v. Hove (1999) 76 Cal.App.4th 1266, 1274 ["the trial court is vested with broad discretion in setting the amount of restitution [and] it may' "use any rational method of fixing the amount of restitution which is reasonably calculated to make the victim whole"' "].)
Lopez-Leon argues the trial court could not base an award on the victim's revenues rather than profits net of business expenses. To the extent his position is the trial court may not consider revenues in determining an appropriate amount to award in restitution, he is wrong. Penal Code section 1202.4 directs the court to choose a restitution amount that "is sufficient to fully reimburse the victim . . . for every determined economic loss incurred as the result of the defendant's criminal conduct, including, but not limited to . . . profits lost due to injury incurred by the victim." (Italics added.) As Lopez-Leon acknowledges, a business's revenues are a starting point for a calculation of gross and net profits, though additional evidence and other calculations are necessary to make an exact determination.
Lopez-Leon suggests the courts must always consider evidence of business expenses before making an award of lost profits. People v. Thygesen is to the contrary. In Thygesen, the defendant stole a cement mixer he had rented from an equipment rental business. (Thygesen, supra, 69 Cal.App.4th at pp. 990-991.) The manager of the victim business testified the theft cost the business 13 months of rental income equal to $3,822. The defendant argued the rental business should not receive the full amount it charged to rent the mixer, but only "the net profit the victim would have realized for the rental of the mixer." (Id. at p. 994.) The Court of Appeal held the trial court was justified in using total amount charged as a measure of economic loss because "[t]he price set on the rental of all of [the] equipment necessarily provides for overhead, depreciation, and profit. Overhead is an ongoing factor in any business. The loss of use of a rental item would possibly have a negative impact on [the] overall financial condition and ability to meet . . . monthly overhead." (Ibid.)
In our case, rather than an equipment rental business, we have a self-employed truck driver who worked under contract with a trucking company to provide delivery services to third parties using a commercial truck he owned. The driver provided his services and equipment as his business, the amount he was paid under his contract with the trucking company was his revenue, and business expenses were like the overhead costs for the rental company. Lopez-Leon argues the economic loss is different from the loss in Thygesen because the accident took the victim's entire business offline, relieving him of such ordinary operating costs as gasoline, truck repairs, toll charges, taxes paid on a per shipment basis, and maintenance related to shipments, as well as administrative costs such as the cost of storing the truck between shipments, insurance, and payments made to professional services like bookkeepers or accountants. He argues compensating the truck driver based on his revenues without discounting for all the business expenses he no longer had to incur-due to the accident-gave the victim a windfall rather than compensating him for his actual economic loss.
Lopez-Leon's argument has some force, and we do not hold that the statute and case law permit trial courts to simply award crime victims their projected revenues without considering other economic realities. Nevertheless, the truck driver here was within his rights to rely on evidence of his lost revenues as a basis for the restitution award. Penal Code section 1202.4, subdivision (f) directs that "the court shall require that the defendant make restitution to the victim or victims in an amount established by court order, based on the amount of loss claimed by the victim or victims or any other showing to the court." (Italics added.) The victim here claimed lost profits of $211,000 for each year after the accident, discounted for the time-value of money, and presented tax documents and expert testimony to support that claim. He also testified in support of his claim and explained he expected his revenues would have continued to grow from the amount he earned in 2017 due to his own increased experience and knowledge. He supported this conclusion with evidence that in the first seven months of 2018 he was already earning at a rate about 17.5 percent higher than he did in 2017.
It was Lopez-Leon's burden to rebut this evidence and submit evidence to prove the amount the victim claimed exceeded his economic losses. (People v. Gemelli, supra, 161 Cal.App.4th at p. 1543.) On cross-examination, Lopez-Leon asked the victim whether the $211,000 figure on his 1099-MISC form from 2017 reflected his gross income and he acknowledged it did. He also acknowledged having expenses for gasoline and truck maintenance that made his net income lower than his gross income. In his direct testimony, the victim conceded business costs of $50,000 in payments on a loan on his truck, though he also said he was within months of completing repayment of the loan. As Lopez-Leon argues, this evidence supported finding the victim's profits in 2017, before the accident, were some amount lower than $211,000.
Nevertheless, we do not conclude the trial court abused its discretion simply by using projected revenues as a basis to estimate economic losses. The evidence of the victim's future economic loss was not limited to his past earnings and the expert's testimony projecting his earnings over five years. The victim testified he expected his income to grow, his expenses to decline, and his trucking career to last another 17 years, all factors the expert did not use to support the victim's claim for restitution. Even if we agreed with the principle that including a precise projection of business expenses in a calculation of future profits would generally result in a better measure of future economic loss, in view of these facts, we would conclude the prosecution made an adequate case that the victim had lost future profits in the amount of about $1,055,000, which could be compensated by a payment of present-day funds totaling $1,015,304.16. The evidence here went far beyond the typical victim impact statement, and included the victim's testimony about his trucking business, his recent and expected income and expenses, and ultimately included tax records over four years which showed his growth in income. The evidence also included the testimony of an expert who used the income information to calculate an estimate of the victim's lost income over five years after the accident, reduced using a standard, conservative interest rate to account for the time-value of money.
In several ways, the estimate was a conservative measure of the victim's future economic loss. The prosecution limited the period of lost profits to five years, even though the victim testified he was 47 years old when the accident occurred and had planned to continue working as a truck driver until he was around 65 years old. Nothing in the statute or case law required the court to limit the measure of the victim's future economic losses to five years. (See Giordano, supra, 42 Cal.4th at p. 665 [upholding restitution award though noting the trial court had no reason for choosing a period of five years as a limitation].) On the contrary, the statute directs the court to make an award 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 defendant's criminal conduct, including . . . ¶ . . . ¶ [w]ages or profits lost due to injury incurred by the victim." (Pen. Code, § 1202.4, subd. (f) &(f)(3), italics added.) The evidence of the victim's lost earnings over five years likely significantly undercounted his lost earning capacity, especially because the evidence indicated he had suffered significant and disabling injuries, would likely never return to trucking which had proven lucrative, and had not yet been able to return to remunerative work of any kind.
The estimate was also conservative in that it discounted economic trends. First, the documents showed a strong upward trend in the victim's earning capacity. He earned $20,000 in 2015 and $60,506.31 in 2016, but his gross earnings increased to $211,481.15 in 2017, and his income rate was higher for the first seven months of 2018, before the accident, when he earned $138,063.16. The expert testified the victim's expected income for the entire 2018 calendar year was $248,241.64. This evidence supported a finding that the victim's earning capacity was growing at a rapid pace and had already exceeded his earnings in 2017. Second, the expert testified that government projections of truck driver earnings indicated an expected two percent annual increase in pay. Third, the expert did not consider inflation in projecting the victim's earnings. He discounted all these trends by projecting the victim's annual earnings would equal his earnings in the last full year before the accident. In other words, the evidence supported finding the victim's gross income would have significantly exceeded $211,000 per year from the second half of 2018 through July 2023. On the facts here, we conclude the trial court did not act in an arbitrary fashion by awarding the victim $1,015,304.16 in future economic losses.
Our decision finds support in the Supreme Court's Giordano decision. That case also involved a vehicular accident, but the driver of the other vehicle was killed, and the victim who received restitution was the deceased's wife, who sought restitution in the form of loss of economic support. (Giordano, supra, 42 Cal.4th at p. 665.) The Supreme Court affirmed the trial court's holding that a surviving spouse is a victim as defined in Penal Code section 1202.4 and can recover loss of economic support as a form of economic loss. Relevant here, the trial court in Giordano found the wife was entitled to receive restitution in the amount of $167,711.65, a figure it reached by multiplying the deceased victim's gross annual earnings by five years. (Giordano, at pp. 650, 665.) The defendant argued that figure exceeded the wife's loss "on the ground that the court did not take into consideration what portion of the decedent's income would have gone to support himself or others." (Id. at p. 666.) The Supreme Court expressed concern that "the trial court's method of calculation was not carefully designed to establish [the victim's] loss," remarking that the court's "method of calculation assume[d] that [the victim] was entitled to receive her husband's gross annual earnings, not just that portion of his earning that went to her economic support. It also assume[d] that five years is the appropriate term for loss of support restitution." (Id. at p. 665.) Despite this disconnect between measurement and loss, the Supreme Court held the trial court had not abused its discretion and approved the award. (Ibid.)
An award of restitution in a criminal case is permissible "as long as the determination of economic loss is reasonable, producing a nonarbitrary result." (Giordano, supra, 42 Cal.4th at p. 665.) The Supreme Court held in the case for lost spousal support, "[f]actors relevant . . . will necessarily depend on the particular circumstances before the court" but generally "may be informed by such factors as the earning history of the deceased spouse, the age of the survivor and decedent, and the degree to which the decedent's income provide support to the survivor's household.... Naturally the court's discretion will be guided by the particular factors at play in each individual claim." (Ibid.)
In a case like this, which involves a claim for lost future profits by a victim who is disabled and rendered unable to continue his business, relevant factors include the victim's history of revenue, the victim's age and the time they expected to continue working, upward or downward trends in the victim's earning capacity before the accident, the victim's ability to return to remunerative work, and also business expenses that would have been paid out of revenues if the business had continued operations. The trial court heard evidence on all these factors and concluded using the victim's revenues from the full calendar year before the accident and multiplying that amount by five was an adequate estimate of his total future lost profits. Though Lopez-Leon established the victim's tax records showed revenues, not gross or net profits, and elicited testimony regarding his business expenses, he did not show the trial court's calculation was an arbitrary measure of his future economic losses due to the loss of his business. (See Giordano, supra, 42 Cal.4th at p. 666 ["Despite the trial court's methodological imprecision, defendant has not shown that the amount of restitution ordered was an abuse of the trial court's discretion"].) On appeal, we presume the trial court's order is correct and make inferences and presumptions that support the order where the record is silent. (Ibid.)
Lopez-Leon asks us to depart from the precedent holding the measure of restitution need not be tied with exactness to the victim's economic loss. He relies on a decision where this court rejected gross profits or gross revenues as a measure of consequential damages in a breach of contract civil action. (Gerwin v. Southeastern Cal. Assn. of Seventh Day Adventists (1971) 14 Cal.App.3d 209, 222-223.) We decline to extend that reasoning to limit the method of calculating restitution orders because it is established that the determination of economic loss must be reasonable rather than exact, and restitution orders need not match the damages recoverable in a civil action. (Giordano, supra, 42 Cal.4th at p. 665; People v. Goulart (1990) 224 Cal.App.3d 71, 83 ["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' "].)
Since we conclude the restitution award was reasonable, we affirm the order.
III
DISPOSITION
We affirm the restitution order.
We concur: CODRINGTON Acting P. J., FIELDS J.