Opinion
NO. 03-16-00587-CR
05-10-2017
Robert Trevino, Appellant v. The State of Texas, Appellee
FROM THE DISTRICT COURT OF LAMPASAS COUNTY, 27TH JUDICIAL DISTRICT
NO. 8866A , HONORABLE JOHN GAUNTT, JUDGE PRESIDING MEMORANDUM OPINION
Appellant Robert Trevino was indicted for misapplication of construction trust funds. See Tex. Prop. Code §§ 162.031, .032. Trevino entered a plea of nolo contendere without agreeing to the amount of restitution. The trial court signed an order of deferred adjudication stating that the evidence supported a finding that Trevino was guilty of felony misapplication of trust funds, ordering him to pay $84,325.20 in restitution to North Texas Hydromulch (referred to in the record as "North Texas Hydromulch," "North Texas Hydromulching Services," or by the name of its owner, Mike Carter) and $1,211.25 to Quality Turf Farms, and placing him on community supervision for ten years. Under the circumstances presented in this record, we hold that the trial court erred in accepting Trevino's plea. We reverse the trial court's order of deferred adjudication and remand to the trial court for further proceedings consistent with this opinion.
Factual Background
Trevino owned and operated an irrigation company called Sprinklerman. In 2010, he contracted to install an irrigation system and sod in a sports complex. Trevino hired several subcontractors, including North Texas Hydromulch, which was to provide and install sod. Disputes arose related to Trevino's work, his failure to pay invoices submitted by some of his subcontractors, including North Texas Hydromulch, and the quality of North Texas Hydromulch's work. As a result of the disputes, Trevino was charged with "'Misapplication of Trust Funds[,]' 162.031 Texas Property Code, F3." The first count alleged that Trevino
intentionally, knowingly, or with intent to defraud, retain[ed], use[d], distribute[d] and otherwise divert[ed] construction trust funds in the amount of $500 or more without first fully paying all current or past due obligations incurred by . . . Mike Carter, of [North Texas Hydromulch].The third count used the same language to allege that Trevino had misapplied more than $500 in construction trust funds owed to Quality Turf Farms. The second count was later waived by the State.
The project and dispute occurred in 2010, Trevino was indicted in 2012, and he was convicted in late 2013. Trevino's trial attorney failed to file a notice of appeal, and Trevino was granted permission to file an out-of-time appeal. See State v. Trevino, No. 03-15-00785-CR, 2016 WL 3582790 (Tex. App.—Austin June 23, 2016, no pet.) (mem. op., not designated for publication).
In October 2013, Trevino signed a "judicial stipulation" stating
I intelligently and voluntarily waive my right to remain silent and do hereby, in open Court, make the following judicialconfessionstipulation and agree and stipulate that these factsare true and correct andmay constitute the evidence in this case[]:
On or about the 29th day of October, A.D. 2010, in Lampasas County, Texas, I being the identical person named as the defendant in the indictment in this cause, did:
then and there intentionally, knowingly, or with intent to defraud, retain, use, disburse and otherwise divert construction trust funds in the amount of $500 or more without first fully paying all current or past due obligations incurred by [North Texas Hydromulch].He also signed an affidavit of admonitions that specified that he was charged with and pled nolo contendere to a third-degree felony and that the range of punishment was from two to ten years with a fine of up to $10,000. See id. § 162.032; Tex. Penal Code § 12.34.
The record indicates that those changes were made by the trial court, and the State did not raise any objections to the changes.
Trevino further signed a "disclosure of plea recommendation" stating that "no plea agreement has been reached between the defendant and the State" but including a handwritten note that appears to say that "the State recommends that any probation assessed be deferred based upon defendant's plea of no contest to the charges." At the hearing on his plea, Trevino agreed when the trial court asked whether he and the State had "entered into some sort of plea bargain" under which the State would not oppose deferred adjudication.
When asked for Trevino's plea on the charge of "knowingly, intentionally or with the intent to defraud" failing to pay funds owed to North Texas Hydromulch, Trevino's attorney responded,
Your Honor, we plead no contest to the fact that he intentionally or knowingly retained the funds. The question of whether it was with intent to defraud we are going to leave up to you, and that's why we have made so many trips over here and you provided us case law. You were going to decide which one it was, whether it was intent to defraud or not intend [sic] to defraud. But there is no doubt that we intentionally and knowingly kept the funds because we believed that went to us instead of the alleged victim.The court said, "[M]y understanding of the law is if the amount is $500 or more, the intent is presumed from the statute. So with regard to Count One, what is your plea, guilty, not guilty, or no contest?" Trevino replied, "No contest," and the court found "that the evidence is sufficient to enter a finding that you are guilty of the offense described in Count One of the indictment."
The court moved on to sentencing, and when Trevino gave the trial court permission to read a presentence investigation report (PSI), the State said that Trevino's attorney had pointed out that the PSI indicated restitution should be "$8,000 some-odd dollars payable to" the general contractor and explained that its "coordinator has picked up the file as any other file and worked it, sent it to probation without, I guess, knowing about the extensive accounting procedure that we have gone through to get to where we are today. So, we both agree that that's not a correct figure, nor is it a correct victim in the case." The State referred to letters it had written to the trial court explaining why North Texas Hydromulch was owed $84,325.20.
The PSI was not included in the appellate record. At the beginning of the hearing, before the trial court accepted Trevino's plea, the court referred to the PSI, asking Trevino whether it included "provision for any payment of restitution." Trevino answered, "Yes, sir," and the trial court proceeded to discuss the plea without discussing the PSI's restitution recommendation.
Trevino's attorney proffered a letter giving Trevino's version of the events, saying, "[T]here is my accounting of why we don't think we owe North Texas any money at all—67,000—to fix [North Texas Hydromulch's] mistakes." Trevino alleged that North Texas Hydromulch had done poor work and abandoned the project, causing Trevino to incur significant expenses to repair the mistakes and finish the work. Trevino also asserted that North Texas Hydromulch had not documented its alleged expenses. He contended that many of the problems with the irrigation system he had installed were due not to his work but instead to debris inherent "in that part of the city and out of everyone's control," and that the general contractor had insisted that the water and grass be installed too early, resulting in lines being broken when run over by heavy equipment. Trevino concluded, "The State wholly failed to prove that Trevino had an intent to defraud."
After the trial court announced its intent to award North Texas Hydromulch restitution in the amount sought by the State, Trevino's attorney said, "I think with those amounts we are setting up my client to fail. There is just no way he's going to be able to pay $84,000. If we may respectfully remove our plea . . . and let's go to trial, we stand ready to do that. The [PSI] lists $8322.89. And . . . that's kind of what we were expecting probation to be . . . ." Trevino asked to be allowed to withdraw his plea, and the trial court refused, stating, "If you would like to file a Motion for New Trial, a Motion in Arrest of Judgment, you're more than legally entitled to do so. That is the judgment of this Court as it stands today." The court signed an order of deferred adjudication, placing Trevino on community supervision for ten years and requiring him to pay $84,325.20 to North Texas Hydromulch and $1,211.25 to Quality Turf Farms.
Trevino filed a motion for new trial asserting that the trial court erred in determining that (1) it lacked the discretion to find Trevino guilty of the lesser-included misdemeanor offense and (2) it could not reduce the restitution from the amount requested by the State. That motion was overruled by operation of law. See Tex. R. App. P. 21.8.
Discussion
Trevino raises three issues on appeal. He argues that the trial court erred in concluding that an intent to defraud is presumed when the amount lost exceeds $500; that the court erred in accepting Trevino's plea of nolo contendere and determining that there was sufficient evidence to support a finding that Trevino was guilty of the felony offense because there was no evidence to support a finding that he acted with intent to defraud; and that the court abused its discretion in making its restitution award because it erroneously believed it could not consider Trevino's offsets and there was no factual basis for the award. The State did not file an appellee's brief.
A person misapplies construction trust funds if he intentionally, knowingly, or with intent to defraud retains, uses, disburses, or otherwise diverts such funds without first paying all due obligations owed to a beneficiary of the funds. Tex. Prop. Code § 162.031(a). It is an affirmative defense that the unpaid funds were used by the defendant to pay his "actual expenses directly related to the construction or repair of the improvement" or if the defendant refuses to pay the funds as a result of a "reasonable belief that the beneficiary is not entitled to such funds." Id. § 162.031(b). Misapplication of trust funds is a Class A misdemeanor if the defendant misapplies $500 or more unless done with "intent to defraud," in which case it is a third-degree felony. Id. § 162.032(a), (b). Although chapter 162 of the property code is not a model of clarity (and, as noted by the trial court, seems better suited to a civil breach-of-contract claim than a criminal case), section 162.032 distinguishes between misapplication of $500 with an "intent to defraud" (a felony) from the misapplication of the same amount of funds without such an intent (a misdemeanor). Id. Both offenses involve misapplication of $500 or more, and the degree of offense turns on the defendant's "intent." See id. To the extent the trial court concluded that intent to defraud is presumed simply because the misapplication involves more than $500, it would have been in error. We sustain Trevino's first issue on appeal.
See also Tex. Prop. Code §§ 162.001(a) (construction payments are trust funds if made to contractor or subcontractor under construction contract for improvement of real property), .002 (contractor or subcontractor who receives or controls trust funds is trustee), .003(a) (artisan, laborer, mechanic, contractor, subcontractor, or materialman who works on or provides labor to construction project is beneficiary of trust funds)
Although this record does not explain the basis for the court's confusion, it would have been understandable due to the definition of "intent to defraud" set out in section 162.005, which provides that a trustee acts with such intent if he "retains, uses, disburses, or diverts trust funds with the intent to deprive the beneficiaries of the trust funds." Id. § 162.005(1)(A). Thus, criminal misapplication of trust funds occurs when the trustee intentionally or knowingly or, somewhat redundantly, "with the intent to deprive the beneficiaries," "directly or indirectly retains, uses, disburses, or otherwise diverts trust funds without first fully paying all current or past due obligations incurred by the trustee to the beneficiaries of the trust funds." See id. § 162.031(a). Section 162.005(1)(A) also appears to remove a fraudulent or otherwise malicious intent from its definition of "intent to defraud," despite the fact that "defraud" in both legal and everyday usage involves an intent to cheat, mislead, or deceive. See, e.g., Black's Law Dictionary 488 (9th ed. 2009) (defining "defraud" as "[t]o cause injury or loss to (a person) by deceit"); American Heritage Dictionary 347 (1973) (defining "defraud" as "[t]o take from or deprive of by fraud; to swindle"); Webster's Third New International Dictionary 593 (2002) (defining "defraud" as "to take or withhold from (one) some possession, right or interest by calculated misstatement or perversion of truth, trickery, or other deception"; "to engage in fraud"; "syn: see cheat"). This issue is not squarely before us in this case, so we need not consider it now. We write here only to note the problems evident in the statute as currently written.
We next turn to the trial court's acceptance of Trevino's plea of nolo contendere, concluding that the court erred in accepting the plea.
In his statement of issues, Trevino asserted that the trial court erred in accepting his plea "where there was no evidence to support a finding that he acted with intent to defraud." His argument, however, asserted that the evidence was insufficient to support the finding of guilt, rather than emphasizing the trial court's acceptance of his plea. Even if the issue of whether the court should have accepted the plea might arguably not be squarely raised in Trevino's brief, however, the court of criminal appeals has held that "appellate courts are free to review 'unassigned error'—a claim that was preserved in the trial below but was not raised on appeal." Pena v. State, 191 S.W.3d 133, 136 (Tex. Crim. App. 2006). Trevino preserved the error by seeking to withdraw his plea before the trial court, which denied that request. Although some unassigned error, such as questions involving "[n]ovel constitutional issues," will require the appellate court to "assign such error by ordering briefing from the parties," this is not such a case. See id. ("We recognize that many, if not most, of the types of error that would prompt sua sponte appellate attention need not be assigned because the error involved constitutes an obvious violation of established rules."). We therefore will consider whether the trial court should have accepted Trevino's plea.
A trial court may convict a person of a felony on a plea of guilty or nolo contendere if the State introduces sufficient evidence showing the defendant's guilt and supporting the defendant's plea. Tex. Code Crim. Proc. art. 1.15.
[T]he defendant may consent to the proffer of evidence in testimonial or documentary form, or to an oral or written stipulation of what the evidence against him would be, without necessarily admitting to its veracity or accuracy; and such a proffer or stipulation of evidence will suffice to support the guilty plea so long as it embraces every constituent element of the charged offense. . . . However, a stipulation of evidence or judicial confession that fails to establish every element of the offense charged will not authorize the trial court to convict. A conviction rendered without sufficient evidence to support a guilty plea constitutes trial error.Menefee v. State, 287 S.W.3d 9, 13-14 (Tex. Crim. App. 2009) (citations omitted, emphasis added); see Tex. Code Crim. Proc. art. 1.15.
Trevino was charged with "intentionally, knowingly, or with intent to defraud" (emphasis added) diverting construction trust funds without first paying current or past due obligations owed to North Texas Hydromulching and Quality Turf Farms. Under the statute in question, the degree of offense, Class A misdemeanor or third-degree felony, hinges on the defendant's intent, and thus in using the disjunctive, the indictment essentially charged Trevino with having committed either felony or misdemeanor misapplication of trust funds. See Tex. Prop. Code § 162.032. The stipulation signed by Trevino merely agreed that he was named in the indictment and that the indictment's allegations, including its disjunctive allegations related to intent, "may constitute the evidence in this case." Even as Trevino entered a plea of nolo contendere, acknowledging the felony range of punishment, Trevino's attorney expressly denied that Trevino had any intent to defraud, insisting that Trevino had been required to remedy defective work by North Texas Hydromulch and presenting documentary evidence that he asserted showed a lack of such an intent. Throughout the hearing, Trevino's attorney repeatedly argued that there was no evidence of an intent to defraud, thus disputing an essential element of felony misapplication of trust funds.
We recognize that the trial court has discretion to decide whether to allow a defendant to withdraw a plea once the court takes the case under advisement or pronounces judgment. Saldana v. State, 150 S.W.3d 486, 490 (Tex. App.—Austin 2004, no pet.). However, Trevino expressly contested the very element that elevated the offense to a felony, and the State presented no proof on the issue, perhaps due to an incorrect assumption that an intent to defraud was presumed to be present when the funds in question were more than $500. On this record, the trial court erred in accepting Trevino's plea of nolo contendere, in necessarily finding that Trevino's plea constituted a plea of no contest to felony misapplication of trust funds, and in refusing to allow Trevino to withdraw his plea, as he requested during the restitution discussion.
Conclusion
Because the court should not have entered its order of deferred adjudication based on Trevino's plea of nolo contendere, we reverse the order and remand the cause to the trial court for further proceedings consistent with this opinion. See Christal v. State, 692 S.W.2d 656, 658 (Tex. Crim. App. 1981). Due to our disposition of the first two issues, we need not reach Trevino's third issue, which complains of the trial court's restitution award to North Texas Hydromulch.
/s/_________
David Puryear, Justice Before Justices Puryear, Pemberton, and Goodwin Reversed and Remanded Filed: May10, 2017 Do Not Publish