Opinion
D072783
05-31-2018
THE PEOPLE, Plaintiff and Respondent, v. ALYCE J. WILLIAMS, Defendant and Appellant.
Lindsey M. Ball, under appointment by the Court of Appeal, for Defendant and Appellant. Xavier Becerra, Attorney General, Gerald A. Engler, Chief Assistant Attorney General, A. Natasha Cortina and Christine Levingston Bergman, Deputy Attorneys General for Plaintiff and Respondent.
NOT TO BE PUBLISHED IN OFFICIAL REPORTS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 This opinion has not been certified for publication or ordered published for purposes of rule 8.1115. (Super. Ct. No. SCD266562) APPEAL from a judgment of the Superior Court of San Diego County, Lisa Schall, Judge. Affirmed in part, reversed in part. Lindsey M. Ball, under appointment by the Court of Appeal, for Defendant and Appellant. Xavier Becerra, Attorney General, Gerald A. Engler, Chief Assistant Attorney General, A. Natasha Cortina and Christine Levingston Bergman, Deputy Attorneys General for Plaintiff and Respondent.
Defendant Alyce J. Williams pleaded guilty to making a false statement in support of an insurance claim. (Pen. Code, § 550, subd. (b)(2).) Pursuant to the plea agreement, the court dismissed the other count of presenting a false motor vehicle claim (§ 550, subd. (a)(4)), and ordered her to serve three years of summary probation and pay victim restitution, including to Farmers Insurance (Farmers) in an amount to be determined.
All further statutory references are to the Penal Code.
At an evidentiary hearing to determine if Farmers was owed victim restitution, respondent the People presented evidence of a cost model employed by Farmers in which the company, on the one hand, used an average investigator's annual salary, benefits, company car expenses, administrative costs and travel expenses, which number, on the other hand, it then divided by 126, the average number of claims each of its investigators annually investigated. Because this model did not take into account the actual — or even estimated — costs Farmers incurred as a result of its investigation into defendant's activity in submitting her insurance claim, we conclude the court abused its discretion when it ordered her to pay Farmers the "average cost per file" of $1,042.17 in victim restitution.
OVERVIEW
"According to Farmers Special Investigations Unit, . . . defendant Alyce Williams was involved in a three[-]vehicle rear[-]end collision on [September 11, 2015,] at approximately 4:40 p.m. The defendant was driving south bound on the Highway 15 and she exited on Market Street in the city of San Diego. Her 2000 Saturn collided with a 1994 Toyota Camry, driven by [A.G.] [A.G.]'s vehicle then collided with a 2015 Ford Explorer, driven by [M.H.] [As to dismissed Count 1]. On [September 11, 2015], at approximately 6:11 p.m., the defendant called the 21st Century Call Center and purchased an insurance policy for her 2000 Saturn online. The time of the purchase was established by her e-mail record. Additionally, the policy did not become effective until [September 12, 2015,] at 12:01 a.m. The policy was purchased approximately one hour after the above described [three-]car accident [As to Count 2]."
"On September 14, 2015[,] at 10:30 [a.m.] [d]efendant reported to 21st Century that she was involved in a traffic collision on September 12, 2015[,] at 11:55 [p.m.] Defendant said that she did not know the make or model of the other vehicle involved in the collision. Defendant said that the other motorist was a woman who gave [d]efendant false contact information."
"On September 14, 2015[,] at 4:00 [p.m.], M.H. filed a counter report with CHP for the collision. [M.H.] reported the collision occurred on September 11, 2015[,] at 4:40 [p.m.] on the I-15 South near the Market Street exit. [M.H.] was at a full stop waiting for traffic to advance when a white Saturn rear-ended a brown Toyota Camry, which then rear-ended [M.H.]'s white Ford Explorer. [M.H.] exchanged information with the driver of the Saturn who was identified as [defendant]. Defendant gave [M.H.] her insurance information but [M.H.] discovered the policy was invalid.
"[On] September 18, 2015[, M.H.] and her husband went to [d]efendant's home to discuss the property damage caused by the accident. Defendant admitted that she did not have insurance at the time of the collision, and agreed to make payments toward the cost of repairs to [M.H.]'s vehicle. Defendant signed a promissory note, but never made payments to [M.H.][]
The record shows at sentencing defendant gave the prosecutor a cashier's check for full restitution to victim M.H.
"[On] September 25, 2015[,] Farmers Special Investigator Thomas Koski interviewed [d]efendant in person. The interview was recorded. Defendant acknowledged that her previous policy had cancelled and she was uninsured for 15-16 days. Defendant also confirmed that the current policy was purchased on September 11, 2015[,] at 6:11 [p.m.] Defendant said the collision occurred on September 12th between 5-6 p.m.
"On September 28, 2015[,] Mr[]. Koski spoke to Progressive Investigator Karena Jimenez. Progressive was the insurance provider for [A.G.] Mrs. Jimenez informed Mr. Koski that [A.G.] reported the collision to Progressive on September 11, 2015[,] reporting it occurred at 4:40 p.m. On September 30, 2015[, defendant's] claim was denied."
On October 2, 2015, Farmers referred a suspected fraudulent claim to the California Department of Insurance, Fraud Division.
Farmers requested restitution in the amount of $1,042.17 for costs incurred in the investigation of this claim. "The restitution claim takes the total yearly costs incurred by [its] investigation department divided by the work expectation of an investigator to arrive [at] the average cost incurred to investigate an insurance claim."
The Farmers restitution hearing took place on August 30, 2017. Koski testified that he had worked as an investigator for Farmers for 17 years; that on average he works on 10.5 cases per month; that he is salaried and makes about $102,000 annually; and that he investigated defendant's claim to Farmers, after its claims department determined the claim was suspicious because the reported loss was on the same day the policy issued.
On investigation, Koski learned defendant had made at least six or seven prior claims, which he also separately investigated. He also listened to the recorded phone call of defendant when she reported the claim. After speaking to the claims agent, Koski next spoke to an individual in the policy services department to obtain the policy details.
Koski next conducted a face-to-face interview with defendant at her home. After the interview, he did additional investigation including speaking to individuals at Progressive Insurance after discovering another claim had been filed with respect to this same collision but with a different date of loss (i.e., one day earlier). Koski determined defendant had purchased her policy after the collision. Koski then contacted the claims representative and reported his findings to the State of California, Department of Insurance and, because of what he believed were "unresolved fraud indicators" with respect to this claim, he also sent a referral to the National Insurance Crime Bureau.
Koski testified he was subsequently contacted by an investigator from the Department of Insurance regarding defendant's claim. Koski oversaw and helped coordinate the preparation and delivery of defendant's claims file, including the policy, notes, recordings and transcripts of recordings, among other information, which he stated was "time consuming." Koski testified he then met with the investigator and turned over the information regarding defendant's claim, after being interviewed by the investigator.
Regarding Farmer's request for restitution of $1,042.17 in the instant case, Koski noted the amount is "derived from the cost of doing business for someone in [his] department, someone in [his] capacity. It was an average salary of [$]74,732, and then benefits are based on 53.7 percent of our salary, company car expenses, administrative costs, and average travel expenses per year," "divided by our typical . . . 10.5 files per month," which equates to a "cost per file that's handled by someone in [his] line of work." Koski added the restitution sought by Farmers in this case was conservative because his salary was substantially higher than the average salary Farmers used to determine the investigate costs per file. Koski noted that, in connection with his field investigations including in defendant's case, he did not log or otherwise record his time, or keep an expense sheet to show the actual costs he incurred.
After the close of evidence, the defense argued Farmers should not be entitled to any restitution because defendant never obtained any benefits, fraudulently or otherwise, on her policy, and because there allegedly was no statutory authorization "for the recovery of investigation costs in automobile insurance fraud cases." The defense further argued any losses sustained by Farmers were purely economic and were not caused by defendant's action, but rather were associated with the "overall operation" of Farmers as an insurance company. After considering the argument of counsel, the court found Farmers was entitled to $1,042.17 in restitution for its investigative costs.
In support of this finding, the court noted there was a strong public policy underlying the Insurance Code to ensure that investigative costs expended by a company be reimbursed, which was necessary in the instant case because without such investigation, defendant's fraud never would have been detected. The court thus rejected the defense's contention that the preexistence of a fraud investigative unit barred recovery of investigative expenses, noting that contention was contrary to the legislative intent of allowing recovery of such costs as a means to reduce and prevent such abuse.
The court also found Koski's testimony credible on the protocol Farmers used to determine its investigative costs in the instant case. The court noted if Farmers had used Koski's salary instead of the average investigator salary in determining restitution in the instant case, the restitution award would have been much higher. Thus, the court found Farmers request was "very conservative" in seeking victim restitution.
DISCUSSION
A. Guiding Principles
Section 1202.4, subdivision (a)(3)(B), requires the court to order a defendant to pay restitution to victims in accordance with subdivision (f). Subdivision (f), states, in pertinent part, "[I]n every case in which a victim has suffered economic loss as a result of the defendant's conduct, 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.) Farmers clearly qualifies for a restitution award in the instant case, as it is a "victim" as defined by statute. (See § 1202.4, subd. (k)(2) [noting a "victim" for purposes of this statute includes a "corporation"]; People v. Sy (2014) 223 Cal.App.4th 44, 62 (Sy).)
" '[T]he 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.' " . . .' [Citation.]" (People v. Ortiz (1997) 53 Cal.App.4th 791, 800.) All that is required is that the court's award have a "rational" basis (id. at p. 799), and the standard of proof at a restitution hearing is preponderance of the evidence. (People v. Baker (2005) 126 Cal.App.4th 463, 469 (Baker).) "[A] prima facie case for restitution is made by the People based in part on a victim's testimony on, or other claim or statement of, the amount of his or her economic loss. [Citations.] 'Once the victim has . . . made a prima facie showing of his or her loss, the burden shifts to the defendant to demonstrate that the amount of the loss is other than that claimed by the victim. [Citations.]' [Citation.]" (People v. Millard (2009) 175 Cal.App.4th 7, 26.) "There is no requirement 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 (1995) 10 Cal.4th 1114, 1121.)
" 'The standard of review of a restitution order is abuse of discretion. "A victim's restitution right is to be broadly and liberally construed." [Citation.] " 'When there is a factual and rational basis for the amount of restitution ordered by the trial court, no abuse of discretion will be found by the reviewing court.' " [Citations.]' [Citation.]" (Baker, supra, 126 Cal.App.4th at p. 467.)
Moreover, although a restitution award may be challenged on the ground no substantial evidence supports the award, "[i]n reviewing the sufficiency of the evidence, the ' "power of the appellate court begins and ends with a determination as to whether there is any substantial evidence, contradicted or uncontradicted," to support the trial court's findings.' [Citations.] . . . 'If the circumstances reasonably justify the [trial court's] findings,' the judgment may not be overturned when the circumstances might also reasonably support a contrary finding. [Citation.] We do not reweigh or reinterpret the evidence; rather, we determine whether there is sufficient evidence to support the inference drawn by the trier of fact." (Baker, supra, 126 Cal.App.4th at pp. 468-469.)
B. Analysis
Here, the issue is not whether Farmers was entitled to restitution for its costs of investigating defendant's claim, as it clearly was. (See e.g., Sy, supra, 223 Cal.App.4th at p. 62 [requiring defendants to pay about $23,000 in victim restitution for investigate costs in connection with their selling or possessing counterfeit marks].) Rather, the issue here is whether Farmer's model to calculate such costs fairly apportioned those costs to defendant's conduct. We conclude it did not.
Our high court's decision of Luis M. v. Superior Court (2014) 59 Cal.4th 300 (Luis M.) guides our analysis on this issue. There, minor Luis M. defaced six locations in the City of Lancaster with nine acts of graffiti. (Id. at p. 303.) At his restitution hearing, a crime prevention officer used a five-year-old cost model to estimate the city's annual graffiti abatement costs; the model included labor and material costs for both investigation and removal of graffiti. (Id. at p. 304.) The officer compared that cost model to the city's annual expenditures and concluded that the city's average outlay per graffiti incident was $431.32. The officer then multiplied that figure by minor's nine instances of graffiti to arrive at a total loss amount of $3,881.88. (Ibid.) Significantly, the officer offered "no information about the actual abatement costs related to Luis's conduct." (Ibid.) The trial court ordered restitution in the amount of $3,881.88, based on the officer's testimony. (Ibid.) The court of appeal issued a writ vacating the order, and our Supreme Court affirmed. (Id. at p. 303.)
Our high court in Luis M. concluded the restitution award "was not based on sufficient evidence that the amount of claimed loss was a result of Luis's conduct." (Luis M., supra, 59 Cal.4th at p. 303.) It explained that the general restitution statute applicable to juvenile offenders, which it noted was " 'parallel' " to section 1202.4 at issue in the instant case (see id. at p. 304), limits restitution to " 'economic losses incurred as the result of the minor's conduct' " (id. at p. 305, italics in original) such as " 'the actual cost of repairing the property when repair is possible.' " (Ibid., italics in original.) The award may include "the materials, equipment, and labor costs incurred for remediation" (id. at p. 309), as well as "[p]reexisting expenditures, such as salaried employees and equipment purchases, . . . provided those costs can be fairly apportioned on a pro rata basis to the minor's conduct." (Id. at p. 309.) While a trial court awarding restitution "need not ascertain the exact dollar amount of the [c]ity's losses" (ibid.), and "retains broad discretion . . . to estimate the material, equipment, and labor costs necessary to repair the damage caused by a discrete act of graffiti" (ibid.), its calculation "must have some factual nexus to the damage caused by the minor's conduct." (Id. at pp. 309, 310.) Because the city's restitution model did not reflect the actual or estimated costs to clean up the graffiti caused by minor's conduct, the court affirmed the decision of the court of appeal to vacate the restitution order. (Id. at p. 303.)
Much like the juvenile restitution statute at issue in Luis M., section 1202.4, subdivision (f) applicable here expressly requires that victim restitution be based on "economic loss as a result of the defendant's conduct." (Italics added.) However, the record here shows Farmers' model was neither based on losses it incurred as a result of defendant's conduct in submitting a fraudulent claim, nor on the actual or estimated harm it suffered caused by such conduct.
Instead, it shows that Farmers calculated its economic losses over the span of 126 claims, which was the average number of claims investigated annually by one of many investigators in its investigation department, which number Farmers then divided by the average yearly costs it incurred per investigator, to arrive at its alleged losses or damages to investigate this particular claim.
Koski's testimony supports our conclusion. While the record clearly shows he expended time and incurred some expenses in investigating defendant's claim, including driving to defendant's house for a face-to-face meeting, he also testified he did not keep logs or records or otherwise account for his time and expenses in investigating this claim. We thus conclude the calculation of Farmers' restitution award lacked a "factual nexus" to the losses or costs it incurred as a result of defendant's submission of what turned out to be a fraudulent claim. (See Luis M., supra, 59 Cal.4th at pp. 309-310.)
DISPOSITION
The victim restitution award of $1,042.17 to Farmers is vacated. Although it appears from Koski's testimony that Farmers has no records or logs to show the time he and Farmers spent investigating this particular claim, we nonetheless remand the matter to allow Farmers the opportunity to prove up its entitlement, if any, to victim restitution. In all other respects, defendant's judgment of conviction is affirmed.
BENKE, Acting P. J. WE CONCUR: O'ROURKE, J. DATO, J.