Opinion
E071567
02-03-2020
THE PEOPLE, Plaintiff and Respondent, v. EDDIE REYES, Defendant and Appellant.
Dejan M. Gantar and Anita P. Jog, under appointment by the Court of Appeal, for Defendant and Appellant. Xavier Becerra, Attorney General, Gerald A. Engler, Chief Assistant Attorney General, Julie L. Garland, Assistant Attorney General, Charles C. Ragland, Alana R. Butler, and Amanda Lloyd, 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NOT TO BE PUBLISHED IN OFFICIAL REPORTS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 This opinion has not been certified for publication or ordered published for purposes of rule 8.1115.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. FWV17004450) OPINION APPEAL from the Superior Court of San Bernardino County. Jon D. Ferguson, Judge. Reversed with directions. Dejan M. Gantar and Anita P. Jog, under appointment by the Court of Appeal, for Defendant and Appellant. Xavier Becerra, Attorney General, Gerald A. Engler, Chief Assistant Attorney General, Julie L. Garland, Assistant Attorney General, Charles C. Ragland, Alana R. Butler, and Amanda Lloyd, Deputy Attorneys General, for Plaintiff and Respondent.
I. INTRODUCTION
Defendant and appellant, Eddie Reyes, pleaded no contest to receiving stolen property valued over $950. (Pen. Code, § 496, subd. (a).) Defendant was sentenced to three years probation. As a term of this probation, defendant was ordered to pay $53,354.77 in restitution to the victim, Best Buy, jointly and severally with his codefendant. Defendant appealed.
All further statutory references are to the Penal Code unless otherwise indicated.
On appeal, defendant argues that the court erred by ordering defendant to pay victim restitution for the retail value of the stolen items and allowing the victim to keep the recovered items. We agree.
II. FACTUAL AND PROCEDURAL BACKGROUND
The facts are taken from the police reports, which the parties stipulated were the factual basis for defendant's plea.
Best Buy contracts with a shipping company to deliver goods to customers. On July 4, 2017, Denis V. was working for such a company, and loaded his truck with 11 items from Best Buy for delivery. Denis V. returned with an empty truck and no verification that he made the deliveries.
The owner of the delivery company for which Denis V. worked checked the global positioning system for Denis V.'s truck, which showed that it was parked near an address in West Covina for over an hour. This address was not on Denis V.'s delivery route. The owner went to the address himself and found several pieces of apparent Best Buy merchandise. The owner also confronted defendant at the property on camera and demanded the items back. Defendant said he would give it back in exchange for $7,500. Defendant did return five items, which the owner returned to Best Buy. The owner filmed both the items at the address and his confrontation with defendant. Both Best Buy and the police watched this video, and Best Buy identified some of the items missing from July 4, 2017, as well as additional items belonging to Best Buy.
Police surveilled the address and eventually detained and questioned defendant. Defendant admitted he lived at the address but denied having any stolen property. After being shown the video of the property, defendant said Denis V. dropped the items off but did not say why and denied otherwise being involved with Denis V. Defendant also admitted that an unknown person had come by earlier in the day and took some of the items Denis V. left.
Police searched the property and found fewer items than were shown in the earlier video. In fact, the searching officers concluded that most of the items had been moved. Indeed, defendant's father and brother admitted to helping defendant move some of these items to his new home. Police then searched defendant's new home and found several additional items, some of which were partially unpackaged.
Best Buy employees were allowed to take possession of the recovered items. It took them approximately eight hours to recover 34 total items with an estimated retail value of $48,600.
The District Attorney of San Bernardino County charged defendant by complaint with receiving stolen property. (Pen. Code, § 496, subd. (a).) On March 23, 2018, defendant pleaded no contest to the charge. The trial court sentenced defendant to three years of probation. As a condition of this probation, defendant was to serve 180 days in county jail, minus any presentence custody credits, through weekend work release. The court also ordered defendant, as a condition of probation, to pay victim restitution to Best Buy. The court scheduled a restitution hearing for April 20, 2018.
Prior to this hearing, the probation department filed a restitution memo stating that Best Buy was seeking $53,354.77 in restitution. In the memo, Best Buy represented that "none of the recovered items [were] eligible for customer sale due to the condition of the items." The memo did not explain the condition of the items, though an email from a Best Buy Asset Protection Manager stated that the items could not be sold to customers because of their "aged condition or storage in the elements." The memo also included a spreadsheet of information (including model and serial numbers as well as retail values) for 28 items for which Best Buy was able to "confirm loss on," and identify as their own.
After six continuances, the trial court held a final restitution hearing on October 5, 2018. The People argued that the requested restitution amount was appropriate because the recovered items "were stored outside in the elements," that Best Buy did not know "whether or not there was some sort of rodent or insect infestation," and that some of the "items had . . . bird droppings" on them. In addition, the People argued that "Best Buy would . . . not be able to resell [the] items because they would first have to incur costs to ensure that those items were still functioning."
The People also represented that Best Buy's supply chain manager told the People that recovery of the items caused Best Buy to incur significant costs. According to the supply chain manager this included transportation for laborers, costs of using a semi-truck and three box trucks, fuel, quarantining the items within Best Buy's warehouse, and storage costs for the items. The supply chain manager told the People that he estimated these costs were in excess of $100,000.
The court ultimately ordered defendant to pay, jointly and severally with codefendant Denis V., the full $53,354.77 requested. The court did so in light of "factual background [and] the supporting documents . . . submitted by Probation," and the People's representation that there were "other items of restitution" Best Buy was not seeking.
Defendant timely appealed.
III. DISCUSSION
Defendant argues that the trial court erred by ordering defendant to pay $53,354.77 in restitution to Best Buy. Specifically, defendant argues that this amount represents a windfall to Best Buy for two reasons: 1) because the restitution order was calculated based on the retail, rather than replacement, value of the items, and 2) because the restitution order did not account for the fact that Best Buy took back possession of many of the items.
"We review the trial court's restitution order for abuse of discretion. [Citation.]" (People v. Woods (2008) 161 Cal.App.4th 1045, 1048-1049.) However, "the scope of a trial court's discretion is broader when restitution is imposed as a condition of probation." (People v. Giordano (2007) 42 Cal.4th 644, 663, fn. 7.) "'[A] condition of probation will not be held invalid unless it "(1) has no relationship to the crime of which the offender was convicted, (2) relates to conduct which is not in itself criminal, and (3) requires or forbids conduct which is not reasonably related to future criminality . . . ."'" (Ibid.) Taking this into account, "the sentencing court violates [the abuse of discretion] standard when its determination is arbitrary or capricious or '"'exceeds the bounds of reason, all of the circumstances being considered.'"'" (People v. Carbajal (1995) 10 Cal.4th 1114, 1121 (Carbajal).)
Both the California Constitution and Penal Code section 1202.4 entitle victims of a crime to restitution from the person convicted of that crime. (Cal. Const., art. I, § 28, subd. (b).) Section 1202.4, subdivision (a)(1), states "that a victim of crime who incurs an economic loss as a result of the commission of a crime shall receive restitution directly from a defendant convicted of that crime." Specifically, "in 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." (§ 1202.4, subd. (f).)
Section 1202.4 thus limits restitution awards for economic loss to losses "resulting from the criminal conduct supporting the crimes of which the defendant was convicted." (People v. Lai (2006) 138 Cal.App.4th 1227, 1247.) Restitution may be ordered as a condition of probation. (Carbajal, supra, 10 Cal.4th at p. 1121.) When imposed as a condition of probation "[t]here 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." (Ibid.)
A. Defendant Did Not Forfeit His Right to Challenge the Restitution Order
We first turn to whether defendant forfeited his restitution claim. A defendant may forfeit his right to challenge the amount of restitution on appeal by failing to object on that ground in the trial court. (People v. Anderson (2010) 50 Cal.4th 19, 26, fn. 6.) The People argue that the defendant forfeited his right to challenge the valuation of the goods because he did not specifically object to using the retail valuation of the goods. In the alternative, the People argue that defendant forfeited his right to challenge the amount because he never objected to Best Buy's possession of the property. We disagree with both contentions.
At the first restitution hearing defendant objected to "the amount because [defendant] was convicted of . . . receiving stolen property, not stealing it . . . and there is no evidence that [defendant] willfully caused damage to the appliances resulting in the amount of loss." The People are correct that this objection, as worded, is relatively general. To the extent that it is specific, it is an objection regarding whether defendant's conduct should limit the restitution imposed, and not to any valuation of the property. The People are also correct that this specific element of the objection was resolved against defendant when he stipulated that he had dominion and control over the objects.
However, "[i]n a criminal case, the objection will be deemed preserved if, despite inadequate phrasing, the record shows that the court understood the issue presented." (People v. Scott (1978) 21 Cal.3d 284, 290.) The record at subsequent restitution hearings makes it clear that the parties and the court understood that defendant's objection to the restitution order included both of the bases defendant articulates here. At the second restitution hearing, the People themselves admitted that "[d]efense had objected to [the] amount [of restitution]," and summarized the question before the court as "would Best Buy be receiving a windfall if the Court were to order [the retail value of the items], in addition to Best Buy actually recovering those items and having those items in possession?" The court then explicitly analyzed one of the central cases on this issue, People v. Chappelone (2010) 183 Cal.App.4th 1159 (Chappelone), distinguished it, and imposed the restitution order for the full retail value of the items over the defendant's objection.
The People argue in the alternative that the fact defendant never objected to Best Buy retaining ownership of the property or otherwise demanded return of the property means he forfeited his right to challenge the disposition of the property. But defendant need not demand the property itself in order to object that the amount of restitution should be reduced to reflect that the property was returned to the victim. Indeed, as discussed above, the People themselves admitted that whether Best Buy "recovering those items and having those items in possession" constituted a "windfall" was an element of defendant's objection. It is therefore clear that both the parties and court understood that possession of the property, in addition to valuation of that property, was a question before the trial court.
The record thus reflects that both of the central issues which are now before this court were previously before the trial court. Defendant properly preserved his objection and did not forfeit his claims.
B. The Trial Court Abused Its Discretion by Awarding Best Buy the Retail Value of the Goods and the Goods
Turning to the merits of defendant's appeal, defendant argues that Best Buy received a windfall in this case because it was allowed to recover the goods themselves and also receive the full retail value of those goods. We agree.
Defendant primarily relies on Chappelone, supra, 183 Cal.App.4th 1159. In that case, an employee of Target and her husband pleaded guilty and no contest respectively to crimes related to taking merchandise from Target that was tagged with either a green, yellow, or red tag. (Id. at pp. 1163-1164.) Green-tagged items were fully functioning items that did not sell, or semi-functional items that could theoretically be restored to full function (such as items that were simply missing pieces). (Id. at p. 1164.) Yellow-tagged items were "items that were damaged in transit to Target or returned by customers because they did not work when purchased," and "which still had a dollar value," because they could be "returned to the vendors, who issued a credit to Target." (Id. at pp. 1163-1164.) Red-tagged items were items which no longer had any financial value to Target. (Id. at p. 1165.) The trial court placed both defendants on probation, imposed a restitution order requiring them to pay Target the last known retail price for each item—totaling $234,185—and allowed Target to recover the stolen items. (Id. at pp. 1167-1168, 1170-1171.)
The reviewing court ultimately held that the trial court abused its authority by awarding the full retail value for the items while also returning the items to Target. With regards to the latter, the court held that "a victim is not entitled to restitution for the value of property that was returned to him or her, except to the extent there is some loss of value to the property." (Chappelone, supra, 183 Cal.App.4th at p. 1180.)
However, the People argue that the Chappelone rule is called into question by People v. Erickson (2018) 30 Cal.App.5th 243 (Erickson). The defendant in that case "stole 520 feet of underwater copper wire from [a] winery." (Id. at p. 245.) The wire was recovered in two pieces, and "[b]ecause the wire could not be spliced, it was unusable in the winery's 500-foot-plus-deep wells." (Ibid.) The trial court ordered defendant "to pay restitution for the full value of the wire he stole and permitted the winery to keep the portions of wire returned to it." (Id. at p. 246.) The defendant appealed, arguing that the trial court abused its discretion by not requiring the winery to either sell the wire and reduce the cost of restitution, or return it to the defendant and allow him to sell it. (Ibid.)
The majority of the reviewing court's panel found that the trial court did not abuse its discretion, agreeing that "there is a distinction between disallowing a victim to overprice the value of what is stolen and foisting upon the victim the burden of returning to the defendant property that is of no value to the victim, but could be of value to the defendant." (Erickson, supra, 30 Cal.App.5th at p. 247.)
We agree with the majority in Erickson when they state that "[t]he thrust of Chappelone is that the victim is not entitled to a windfall," and that "[a] wrongdoer should not profit from his or her wrongdoing." (Erickson, supra, 30 Cal.App.5th at p. 247.) As the Chappelone court recognized, even broken, damaged, or unsellable property can be "of some value, and returning it all to [Best Buy] was . . . 'at odds with the court awarding full retail value.'" (Chappelone, supra, 183 Cal.App.4th at p. 1181.) We believe that Chappelone's statement of the law was both clear and correct, and that "a victim is not entitled to restitution for the value of property that was returned to him or her, except to the extent there is some loss of value to the property." (Id. at p. 1180.)
Moreover, we find the present case distinguishable from Erickson. In Erickson, defendant damaged the stolen property in such a way that it was no longer fit for the purpose for which it was designed and was essentially useless to the victim. Moreover, defendant's actions rendered the victims' well system inoperable, likely affecting other portions of their property and business.
That was not the case here. There is no evidence in the record that defendant's actions rendered the property worthless, only that it rendered it not sellable in a retail capacity. The evidence available suggests that defendant's storage of the items damaged the packaging, but Best Buy explicitly did not attempt to assess whether the items themselves were damaged. Therefore, it is unknown whether the items at issue here were essentially worthless as in Erickson. Indeed, as discussed above, Chappelone explicitly recognizes that retail items rendered unsellable in a retail capacity may still retain value that should be reflected in any restitution award. (Chappelone, supra, 183 Cal.App.4th at p. 1181.) Nor is there any evidence that defendant's criminal activity caused any compensable damage to any other portion of Best Buy's business.
Best Buy is therefore entitled to either compensatory payment for the full value of the stolen goods, or the goods themselves plus the diminution in value of those goods. In neither case is Best Buy entitled to the goods themselves and the full value of those goods unless they present evidence that defendant's conduct rendered those items actually worthless to Best Buy.
C. The Trial Court Abused Its Discretion by Awarding Best Buy the Retail, Rather than Wholesale, Value of the Goods
Next, we turn to whether the trial court abused its discretion in determining that the full value of the items was their retail, rather than wholesale, value.
Defendant again relies on Chappelone for the proposition that the sentencing court should not use the retail value of stolen items that were recovered and returned to their retailer as the basis for a calculation of restitution. In Chappelone, at the time the items were stolen from the retailer many were already significantly devalued, with red-tagged items being complete losses and green- and yellow-tagged items worth significantly less than their retail value. (Chappelone, supra, 183 Cal.App.4th at pp. 1163-1165.) Under those circumstances, the court held that awarding restitution based on the full retail value of the property was an abuse of discretion because "[m]ost of the stolen merchandise was never going to be sold to customers because it was, quite simply, unsellable." (Id. at p. 1178.)
However, in addition to the already devalued property, there were also some items which were new and sellable amongst the stolen property. (Chappelone, supra, 183 Cal.App.4th at p. 1179.) The Chappelone court held that the proper valuation for these items was also their wholesale, rather than retail, value, as "[t]hese were not unique products, but were mass-produced consumer goods that Target sold in abundance. Indeed, the fact that Target is a massive, nationwide retail store with a system for tracking goods suggests the items stayed in stock and no customer was ever deprived of a purchase." (Chappelone, supra, 183 Cal.App.4th at p. 1179.) Because of this "there was no evidence that there was not a comparable replacement to sell to Target's customers," and therefore no evidence that the theft deprived Target of the profits of a sale. (Id. at p. 1179.) Given this factual scenario, the court held that the calculation of the value of the stolen goods, whatever their condition, should use their wholesale value as its starting point. (Id. at pp. 1178-1179.)
Similar circumstances exist here. Best Buy's position with regards to its stolen retail-ready items is identical to Target's. Both are large national retailers selling mass-market, mass-produced goods. As in Chappelone, there is no evidence here that the theft made it impossible for Best Buy to find comparable replacements for willing buyers. There is thus no evidence that the theft deprived Best Buy of a sale or otherwise caused it to lose profits on the stolen items. That all, rather than only a small percentage, of the stolen items were retail-ready when taken is a difference in degree, not kind. Chappelone's analysis of the valuation of stolen retail-ready items is as true where all of the items were retail-ready as where only some of them are.
Accordingly, we find that the trial court abused its discretion when it ordered defendant to pay the full retail value of the items as restitution. A large national retailer like the one here and in Chappelone is entitled to, at most, the wholesale value of stolen items, not their retail value, unless they can provide evidence that the stolen items were unique, unusual, or otherwise difficult to replace and therefore likely robbed the retailer of a potential sale. Where, as here, the victim is able to regain possession of the stolen items, they are entitled to any diminution in the wholesale value of the goods caused by defendant's criminal activity.
D. Best Buy Is Entitled to Investigation, Transportation, and Storage Costs
Lastly, the People urge us to affirm the trial court's restitution award in part because the record at the restitution hearing indicated that Best Buy's total costs greatly exceeded their claimed costs. Indeed, the trial court took this into account, stating that it believed awarding the full retail value of the items was "appropriate given the fact that there is [sic] countless other items of restitution that could be recovered in terms of the transportation costs, the investigation storage [sic] and alike, that are not being sought." We disagree with the People's requested approach, but agree that Best Buy is entitled to these costs to the extent that Best Buy can provide evidence supporting them.
The People have the initial burden to prove any claimed costs. "At a victim restitution hearing, 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.'" (People v. Millard (2009) 175 Cal.App.4th 7, 26.) This is a relatively low bar and may be satisfied by a victim's summary accounting as recorded in a probation report. (See People v. Foster (1993) 14 Cal.App.4th 939, 946-947, superseded by statute on other grounds as stated in People v. Birkett (1999) 21 Cal.4th 226, 238-245.) However, the mere mention of a cost estimate is not sufficient to support a restitution order without more. (See People v. Harvest (2000) 84 Cal.App.4th 641.)
At the restitution hearings below, the People and Best Buy chose not to seek any costs beyond the retail value of the stolen items. However, the People stated that they spoke to Best Buy's supply chain manager, who explained the types of costs incurred and estimated their total value at over $100,000. This explanation and estimation was the only evidence of Best Buy's investigation, transportation, and storage costs. No documentary evidence provided a more detailed explanation or breakdown. This included the restitution memo prepared by the probation department, which did contain a detailed accounting of the value of each item.
Based solely on the record before us, we do not believe the People met their burden to prove a prima facie case for investigation, transportation, storage, or other indirect costs incurred by Best Buy. Because the People did not meet their burden, the record does not support the trial court's knowingly excessive valuation of the stolen property, especially in light of Best Buy's continued possession of that property.
However, this does not mean these costs are not recoverable given competent evidence. Indeed, Chappelone explicitly permits Best Buy to recover the costs of investigation, transportation, and storage of the stolen property, among other costs. (Chappelone, supra, 183 Cal.App.4th at pp. 1182-1183.) Best Buy would be entitled to any of these costs to the extent they and the People are able to establish a prima facie case for restitution of these costs on remand at the restitution hearing.
IV. DISPOSITION
The order requiring defendant to pay $53,354.77 in victim restitution is reversed, and the matter remanded for a further hearing on the amount of restitution owed by defendant to Best Buy. In the proceedings below, the court shall allow restitution to Best Buy for the difference between the wholesale value of the goods and the present value of the goods, plus any investigation, transportation, and storage costs incurred by Best Buy in recovering the goods.
NOT TO BE PUBLISHED IN OFFICIAL REPORTS
FIELDS
J. We concur: McKINSTER
Acting P. J. MILLER
J.