Title: RSI Bank v. The Providence Mutual Fire Insurance Company
Citation: N/A
Docket Number: 
State: new-jersey
Issuer: new-jersey Supreme Court
Date: August 7, 2018

RSI Bank v. The Providence Mutual Fire Insurance Company Annotate this Case Justia Opinion Summary Third-party defendant Dr. George Likakis was charged with aggravated arson and insurance fraud after a fire destroyed a building he owned (the Property). Plaintiff RSI Bank held a first-priority mortgage on the Property, and defendant/third-party plaintiff The Providence Mutual Fire Insurance Company (Providence) issued a commercial liability policy that covered the Property. Following the fire, Likakis and RSI Bank submitted insurance claims. Providence denied both sets of claims. Providence’s denial of coverage prompted the filing of two actions in the Law Division: (1) filed by Likakis against Providence; and (2) an action gave rise to this appeal: RSI Bank’s claims against Providence for breach of contract, fraudulent misrepresentation, violations of the Consumer Fraud Act, and bad faith. Providence filed a third-party complaint against Likakis, alleging claims for indemnification. Both civil lawsuits were pending when criminal proceedings commenced against Likakis. Likakis was indicted; Providence did not object to Likakis’ admission to the PTI program, provided he paid restitution, committed to protect/compensate Providence from all claims that might be brought by RSI, and dismissal of Likakis’ suit against Providence. With Likakis’s consent - but no assessment of his ability to pay - the court also imposed the three conditions that Providence had requested. During his PTI term, Likakis paid Providence the specific restitution amount and dismissed with prejudice his lawsuit. Likakis did not make any payment related to the separate indemnification provision. With the prosecutor’s consent, the PTI court terminated Likakis’s PTI supervision and dismissed his indictment. RSI Bank and Providence settled their coverage dispute. Providence agreed to pay RSI Bank to settle all of the bank’s claims based on the insurance policy and moved for summary judgment against Likakis based on the provision of the PTI agreement. The court held that the indemnification provision of the PTI agreement was enforceable against Likakis and ordered Likakis to pay Providence the portion of the settlement funds Providence attributed to fire damage, less the amount Likakis had paid during his PTI supervisory period. Likakis appealed, and an Appellate Division panel affirmed. The New Jersey Supreme Court reversed, finding an open-ended agreement to indemnify the victim of the participant’s alleged offense for unspecified future losses was not an appropriate condition of PTI. Moreover, a restitution condition of PTI was inadmissible as evidence in a subsequent civil proceeding against the PTI participant. The indemnification provision of the PTI agreement at issue should have played no role in this civil litigation. Read more Want to stay in the know about new opinions from the Supreme Court of New Jersey? Sign up for free summaries delivered directly to your inbox. Learn More › You already receive new opinion summaries from Supreme Court of New Jersey. Did you know we offer summary newsletters for even more practice areas and jurisdictions? Explore them here . SYLLABUS(This syllabus is not part of the opinion of the Court. It has been prepared by the Office of the Clerk for the convenience of the reader. It has been neither reviewed nor approved by the Court. In the interest of brevity, portions of any opinion may not have been summarized.) RSI Bank v. The Providence Mutual Fire Insurance Company (A-68-16) (079116)Argued January 17, 2018 -- Decided August 7, 2018PATTERSON, J., writing for the Court. This appeal arises from the trial court’s reliance on an indemnification obligation, designated as a condition of pretrial intervention (PTI), as evidence in a civil dispute. Third-party defendant Dr. George Likakis was charged with aggravated arson and insurance fraud after a fire destroyed a building he owned (the Property). Plaintiff RSI Bank held a first-priority mortgage on the Property, and defendant/third-party plaintiff The Providence Mutual Fire Insurance Company (Providence) issued a commercial liability policy that covered the Property. Following the fire, Likakis and RSI Bank submitted insurance claims. Providence denied both sets of claims. Providence’s denial of coverage prompted the filing of two actions in the Law Division. The first was filed by Likakis against Providence. The second action gave rise to this appeal: RSI Bank asserted against Providence claims for breach of contract, fraudulent misrepresentation, violations of the Consumer Fraud Act, and bad faith. Providence filed a third-party complaint against Likakis, alleging claims for indemnification. Both civil lawsuits were pending when criminal proceedings commenced against Likakis. A grand jury indicted Likakis, who applied for admission into the PTI program. The PTI director recommended his admission and told the PTI court that “the victim, [Providence], does not object to the defendant’s enrollment into PTI as long as” Likakis satisfied three conditions: restitution in the amount of $11,321.89, representing the insurance proceeds already paid to RSI Bank; Likakis’s commitment to “protect/compensate [Providence] from any and all claims that may be brought against [Providence] by RSI Bank as the result of the . . . fire”; and the dismissal with prejudice of Likakis’s lawsuit against Providence. The prosecutor consented to those terms. The PTI court approved Likakis’s admission into PTI and entered an order postponing further proceedings in Likakis’s criminal matter for a period of one year. With Likakis’s consent -- but no assessment of his ability to pay -- the court also imposed the three conditions that Providence had requested. During his PTI term, Likakis paid Providence the specific restitution amount and dismissed with prejudice his lawsuit. Likakis did not make any payment related to the separate indemnification provision. With the prosecutor’s consent, the PTI court terminated Likakis’s PTI supervision and dismissed his indictment. 1 RSI Bank and Providence settled their coverage dispute. Providence agreed to pay RSI Bank $353,536.90 in settlement of all of the bank’s claims based on the insurance policy and moved for summary judgment against Likakis based on the provision of the PTI agreement in which Likakis agreed to indemnify and hold harmless Providence. The motion judge granted in part and denied in part Providence’s summary judgment motion. He found genuine issues of material fact as to whether the parties to the PTI agreement intended that agreement to survive the PTI supervisory period, and the amount of any damages for which Likakis would be liable. Those undecided issues were litigated in a non-jury trial. Following the trial, the court held that the indemnification provision of the PTI agreement was enforceable against Likakis and ordered Likakis to pay Providence $232,568.71, representing the portion of the settlement funds that Providence attributed to fire damage, less $11,321.89, the amount that Likakis had paid during his PTI supervisory period. Likakis appealed, and an Appellate Division panel affirmed the trial court’s judgment, rejecting Likakis’s argument that the agreement could be enforced only during the one-year period of PTI supervision. The Court granted Likakis’s petition for certification. 230 N.J. 414 (2017).HELD: A PTI court may include a restitution condition in a PTI agreement only if it can quantify the financial obligation and assess the participant’s current and prospective ability to meet that obligation. An open-ended agreement to indemnify the victim of the participant’s alleged offense for unspecified future losses is not an appropriate condition of PTI. Moreover, a restitution condition of PTI is inadmissible as evidence in a subsequent civil proceeding against the PTI participant. The indemnification provision of the PTI agreement at issue should have played no role in this civil litigation.1. PTI is an alternative to the traditional process of prosecuting criminal defendants. It exists to provide prosecutors an alternate method to dispose of charges levied against qualified applicants consistent with the interest of the applicant and the overall interests of society and the criminal justice system. The PTI statute, N.J.S.A. 2C:43-12 to -22, prescribes seventeen criteria for admission to PTI. See id. § 12(e). When Likakis applied for PTI, Rule 3:28 and its Guidelines supplemented the statutory criteria. The PTI statute and court rule recognize the importance of a victim’s concerns in PTI determinations, as does case law. (pp. 14-19)2. Restitution serves to rehabilitate the wrongdoer and to compensate the victim of the wrongdoer’s conduct. An order of restitution is designed to strip a defendant of pecuniary gain from the crime where that gain is directly related to the crime itself and the defendant has the ability (though not necessarily the immediate means) to pay. (pp. 19-20)3. In criminal sentencing, a court imposes restitution in addition to a term of imprisonment or probation if “(1) [t]he victim . . . suffered a loss; and (2) [t]he defendant is able to pay or, given a fair opportunity, will be able to pay restitution.” N.J.S.A. 2C:44-2(b). The statutory constraints ensure that the defendant will be capable of paying the restitution amount, thus achieving the rehabilitative goal. When a sentencing court has not conducted a meaningful evaluation of a defendant’s ability to pay, appellate courts routinely vacate restitution orders and remand for reconsideration. Thus, in the sentencing context, a restitution order will not 2 survive appellate review if the sentencing court has not specified the restitution amount and determined whether the defendant will be capable of paying that amount. (pp. 20-22)4. For purposes of PTI, Rule 3:28 incorporated the core principles that govern restitution awards in criminal sentencing. First, in PTI proceedings as in sentencing, restitution exists to serve a rehabilitative goal and to compensate the victim. Second, a PTI court was authorized to impose a restitution obligation only after a careful assessment in a hearing of the defendant’s ability to pay. PTI Guideline 3(k) mandated that any restitution requirement “be judicially determined at the time of enrollment.” Thus, before entering a restitution order, the court was required to quantify the obligation to be imposed and determine whether the defendant would be in a position to meet that obligation. Third, the court rule governing Likakis’s admission into PTI maintained a clear distinction between a PTI restitution order and any civil claim that may arise from the PTI participant’s offenses against the victim. Evidence of a restitution condition imposed in PTI was “not admissible against [the participant] in any subsequent civil or criminal proceeding.” Pressler & Verniero, Current N.J. Court Rules, Guideline 3(k) to R. 3:28, at 1292 (2018). Consistent with its rehabilitative purpose, a PTI agreement is not intended to serve as the basis for civil liability. (pp. 23-25)5. Here, the PTI court appropriately took into account Providence’s view. The PTI court did not, however, take the steps necessary to properly impose the indemnification requirement as a condition of PTI. The record reflects no ability-to-pay hearing to assess Likakis’s current and future resources, and the PTI court did not impose a specific restitution obligation or payment schedule for any restitution amount beyond the $11,321.89 that Likakis was required to pay. The indemnification provision in Likakis’s PTI agreement did not conform to the requirements of a valid restitution condition of PTI. (pp. 25-27)6. Based on the record, there is no indication that any party or the PTI court addressed the indemnification provision at the close of Likakis’s one-year PTI supervisory period. Instead, the PTI court terminated Likakis’s PTI period and dismissed his indictment with no order regarding any outstanding restitution obligation. With his PTI proceedings thus concluded, Likakis had no obligation to make additional payments under the restitution provision of the PTI court’s order. (pp. 27-28)7. Even if the PTI court had imposed an appropriate restitution condition on Likakis, that condition could not have been properly admitted in this civil matter. The invalid indemnification provision of the PTI agreement was clearly inadmissible in this case, either as the basis for the motion court’s grant of partial summary judgment or as the dispositive evidence in the non-jury trial. Accordingly, the trial court improperly enforced the indemnification provision and entered judgment in Providence’s favor. (pp. 28-29) REVERSED.CHIEF JUSTICE RABNER and JUSTICES LaVECCHIA, ALBIN, FERNANDEZ- VINA, SOLOMON, and TIMPONE join in JUSTICE PATTERSON’s opinion. 3 SUPREME COURT OF NEW JERSEY A- 68 September Term 2016 079116 RSI BANK, a New Jersey Banking Corporation, Plaintiff, v.THE PROVIDENCE MUTUAL FIRE INSURANCE COMPANY, Defendant Third-Party Plaintiff-Respondent, v.DR. GEORGE LIKAKIS, Third-Party Defendant- Appellant. Argued January 17, 2018 – Decided August 7, 2018 On certification to the Superior Court, Appellate Division. Allen N. Papp argued the cause for appellant (Adams, Cassese & Papp, attorneys; Allen N. Papp, on the briefs). Marc L. Dembling argued the cause for respondent (Methfessel & Werbel, attorneys; Marc L. Dembling, of counsel and on the brief, and Danielle N. Singer, on the brief). JUSTICE PATTERSON delivered the opinion of the Court. When a criminal defendant is admitted into pretrialintervention (PTI), the court may impose on that defendant theobligation to pay restitution to the victim of his or her 1 alleged offense as a condition of PTI. In accordance with thePTI program’s rehabilitative goal, the PTI court holds a hearingto determine the participant’s ability to pay and orders theparticipant to pay a specific amount. Evidence of a restitutionobligation imposed as a condition of PTI is inadmissible in anysubsequent civil or criminal proceeding against the defendant. This appeal arises from the trial court’s reliance on anindemnification obligation, designated by a PTI court as acondition of PTI, as dispositive evidence in a civil dispute.Third-party defendant Dr. George Likakis was charged withaggravated arson and insurance fraud after a fire destroyed aresidential building that he owned. When Likakis was admittedinto PTI, the PTI court required him to pay a specific amount inrestitution to his insurer, defendant/third-party plaintiff TheProvidence Mutual Fire Insurance Company (Providence), based onProvidence’s prior insurance payments to plaintiff RSI Bank,holder of a mortgage on the property. The PTI court alsoordered Likakis to indemnify Providence and hold it harmless forits undetermined future liability to RSI Bank arising from thefire. The PTI court thus imposed on Likakis an unquantifiedrestitution requirement, without first determining that Likakiscould meet such an obligation. During his one-year period of PTI supervision, Likakis paidProvidence the specified restitution amount but did not 2 indemnify Providence or hold it harmless for any additionalliability to RSI Bank. With the prosecutor’s consent and withno discussion of the indemnification provision, the PTI courtterminated Likakis’s PTI supervision and dismissed hisindictment. In this insurance coverage litigation, Providence relied onthe indemnification provision of Likakis’s PTI agreement in itsthird-party complaint against Likakis. It settled its claimswith RSI Bank for $353,536.90, and sought to recover $243,890.60from Likakis on the basis of the indemnification provision. Thetrial court enforced the provision and entered judgment inProvidence’s favor against Likakis. An Appellate Division panelaffirmed that determination. In appropriate settings, a PTI court’s imposition ofrestitution as a condition of PTI furthers the participant’srehabilitation as it compensates the victim of the allegedoffense. A PTI court, however, may include a restitutioncondition in a PTI agreement only if it can quantify thefinancial obligation and assess the participant’s current andprospective ability to meet that obligation. An open-endedagreement to indemnify the victim of the participant’s allegedoffense for unspecified future losses is not an appropriatecondition of PTI. Moreover, a restitution condition of PTI isinadmissible as evidence in a subsequent civil proceeding 3 against the PTI participant. The indemnification provision ofLikakis’s PTI agreement should have played no role in this civillitigation. Accordingly, we hold that the trial court erred when itentered judgment in favor of Providence. We reverse theAppellate Division’s judgment and remand the matter to the trialcourt for further proceedings. I. We derive our summary of the facts from the recordpresented to the trial court in this matter. Pursuant to a Mortgage and Security Agreement dated October14, 2003, RSI Bank held a first-priority mortgage on severalproperties as collateral for a $700,000 loan to Perth AmboyProfessional Center, LLC, a limited liability corporation ownedby Likakis. One of the properties subject to the mortgage was aresidential property located at 519 New Brunswick Avenue inPerth Amboy (the Property). On June 21, 2011, Providence issued a commercial liabilitypolicy to Likakis and Perth Amboy Professional Center, LLC,which covered the Property. The policy, in effect from August20, 2011 to August 20, 2012, named RSI Bank as firstmortgagee/loss payee. The policy obligated Providence to “payfor covered loss of or damage to buildings or structures to eachmortgageholder shown in the Declarations in their order of 4 precedence, as interests may appear.” It included the followingprovision: If we pay the mortgageholder for any loss or damage and deny payment to you because of your acts or because you have failed to comply with the terms of the Coverage Part: (1) The mortgageholder’s rights under the mortgage will be transferred to us to the extent of the amount we pay; and (2) The mortgageholder’s right to recover the full amount of the mortgageholder’s claim will not be impaired. At our option, we may pay to the mortgageholder the whole principal on the mortgage plus any accrued interest. In this event, your mortgage and note will be transferred to us and you will pay your remaining mortgage debt to us. On August 28, 2011, Hurricane Irene caused a flood thatsubstantially damaged the roof and basement of the residentialbuilding on the Property. On January 6, 2012, the building wasvirtually destroyed in a fire. It was eventually condemned anddemolished. Witnesses told investigators that they had seenLikakis, wearing latex gloves and carrying a heavy package, onthe Property the day before the fire. Investigators attributedthe fire to arson. Following the fire, Likakis submitted insurance claims toProvidence based on flood and fire damage to the Property. RSIBank, in its capacity as mortgage holder and loss payee, alsosubmitted claims to Providence for flood and fire damage to the 5 Property. Following a “thorough investigation,” Providencedenied both sets of claims. II. A. Providence’s denial of coverage prompted the filing of twoactions in the Law Division. The first was filed by Likakis’sdental practice, Dr. George Likakis, DDS, and Perth AmboyProfessional Center, LLC. In that action, the plaintiffsalleged that Providence had denied coverage in bad faith. The second action was the lawsuit that gave rise to thisappeal. In that case, RSI Bank asserted against Providenceclaims for breach of contract, fraudulent misrepresentation,violations of the Consumer Fraud Act, N.J.S.A. 56:8-1 to -210,and bad faith. Providence filed a third-party complaint againstLikakis, alleging claims based on both common law andcontractual indemnification. Both civil lawsuits -- Likakis’s action against Providence,and RSI Bank’s action against Providence in which Likakis wasnamed as a third-party defendant -- were pending when theMiddlesex County Prosecutor’s Office commenced criminalproceedings against Likakis. B. On May 23, 2013, a Middlesex County grand jury indictedLikakis on one count of second-degree aggravated arson, N.J.S.A. 6 2C:17-1(a), one count of third-degree insurance fraud based onfalse statements of material fact, N.J.S.A. 2C:21-4.6(a)(1), andone count of third-degree insurance fraud based on omission ofmaterial facts, N.J.S.A. 2C:21-4.6(a)(1). Likakis applied for admission into the Middlesex Vicinage’sPTI program. On April 30, 2014, the PTI Director recommendedthat Likakis be admitted into PTI. In the PTI Recommendation,the Director noted the fire investigator’s conclusion that thefire resulted from arson and stated that witnesses implicatedLikakis in that arson. The PTI Director stated, however, thatthe incident represented the only charge for an indictableoffense in Likakis’s history, and deemed the fire to be an“isolated event.” The PTI Director concluded that Likakis would benefit fromsupervised treatment. She told the PTI court that althoughLikakis was indicted for a second-degree offense, “the victim,[Providence], does not object to the defendant’s enrollment intoPTI as long as” Likakis satisfied three conditions: restitutionin the amount of $11,321.89, representing the insurance proceedsalready paid to RSI Bank; Likakis’s commitment to“protect/compensate [Providence] from any and all claims thatmay be brought against [Providence] by RSI Bank as the result ofthe . . . fire”; and the dismissal with prejudice of Likakis’s 7 lawsuit against Providence. The prosecutor consented to thoseterms. The PTI court approved Likakis’s admission into PTI. OnMay 14, 2014, the court entered an order postponing furtherproceedings in Likakis’s criminal matter for a period of oneyear, and setting forth the standard and special conditions ofhis PTI supervision.1 With Likakis’s consent -- but noassessment of his ability to pay -- the court also imposed thethree conditions of PTI that Providence had requested. First,Likakis was required to pay Providence $11,321.89 in monthlyinstallments of $1000 per month. Second, Likakis was ordered to“[p]rotect/compensate, indemnify and hold harmless [Providence]from any and all claims that may be brought against [Providence]by RSI Bank.”2 Third, Likakis was required to dismiss his civilaction against Providence with prejudice. At a hearing before the PTI judge, at which Providence wasnot represented, the prosecutor confirmed Likakis’s agreement tothose terms. The prosecutor stated that the terms “indemnify,1 The standard conditions of PTI supervision imposed included compliance with the law; contacts with the probation officer as directed; no unauthorized move out of state; maintenance of employment; and cooperation with any required testing, treatment, and counseling.2 The phrase “indemnify and hold harmless” was a handwritten addition to the typed agreement, and was initialed by the prosecutor, who confirmed on the record that he wrote that language into the agreement. 8 hold harmless, compensate” meant that Likakis would not “pursuenow or ever any claim against [Providence] regarding the lossand the payment that [Likakis was] going to make to [Providence]for the $11,000.” Likakis confirmed that he understood thatagreement as the prosecutor characterized it. The prosecutorreminded Likakis that his PTI conditions were “independent” ofthe one-year period of supervision, and told Likakis that hisPTI would not be terminated after a year if he failed to makethe required payments. The PTI court subsequently explained to Likakis theconsequences of the “monetary obligation” imposed on him as acondition of his admission into PTI. The court stated that“[i]t’s important that that indemnification be paid within the12-month period. Otherwise, there’s a possibility that P.T.I.may be extended until you’ve handled all your financialobligations.” During his one-year PTI supervisory term, Likakis paidProvidence the specific restitution amount set forth in his PTIagreement. He also dismissed with prejudice his lawsuit againstProvidence. Likakis did not make any payment to Providencerelated to the separate indemnification provision. By order dated May 20, 2015, with the prosecutor’s consent,the PTI court terminated Likakis’s PTI supervision and dismissedhis indictment. The record reveals no discussion of the 9 indemnification provision of Likakis’s PTI agreement in thefinal stage of his PTI supervision. C. The coverage litigation that gave rise to this appeal waspending during Likakis’s year-long PTI supervision. WhenLikakis completed PTI on May 20, 2015, the matter remainedunresolved. On July 31, 2015, RSI Bank and Providence settled theircoverage dispute. Providence agreed to pay RSI Bank $353,536.90in settlement of all of the bank’s claims based on the insurancepolicy that insured Likakis’s property, including claims arisingfrom flood and fire damage to that property. As part of thatsettlement, RSI Bank assigned to Providence a second-lienposition in a mortgage issued by RSI Bank to Likakis, his wife,and his dental practice, as well as the note that accompaniedthat mortgage. In the assignment, RSI represented that thebalance due on the mortgage was $353,536.90. Providence moved for summary judgment against Likakis basedon the provision of the PTI agreement in which Likakis agreed toindemnify and hold harmless Providence. It asserted that it wasa third-party beneficiary of that agreement, and that Likakiswas liable to it in the amount of its settlement with RSI Bank. The motion judge granted in part and denied in partProvidence’s summary judgment motion. The judge held that 10 Providence was a third-party beneficiary of the PTI agreement’sindemnification provision. He found, however, genuine issues ofmaterial fact as to whether the parties to the PTI agreementintended that agreement to survive the PTI supervisory period,and the amount of any damages for which Likakis would be liable. Those undecided issues were litigated in a non-jury trial.The evidence consisted entirely of documents. No witnesstestified for either party. Following the trial, the court entered judgment in favor ofProvidence on its contractual indemnification claim.3 The courtheld that the indemnification provision of the PTI agreement wasenforceable against Likakis notwithstanding the conclusion ofhis PTI supervision. The trial court cited the plain languageof the agreement and Likakis’s acknowledgment when he wasadmitted into PTI that he was bound by the agreement. The trialcourt concluded that the PTI agreement imposed a “restitution orreimbursement” obligation on Likakis, and that the agreement didnot expire after the one-year period of PTI supervision. It3 Addressing Providence’s claims for common-law indemnification, the trial court opined that Likakis’s only duty to Providence derived from the insurance policy, and found that Providence had “failed to meet its burden to prove by a preponderance of the evidence that the arson was an act of [Likakis] entitling it to recovery.” In the accompanying order, however, the trial court did not dismiss, or otherwise address, the counts of the third- party complaint that asserted a common-law indemnification claim. 11 ordered Likakis to pay Providence $232,568.71, representing theportion of the settlement funds that Providence attributed tofire damage, less $11,321.89, the amount that Likakis had paidProvidence during his PTI supervisory period. Likakis appealed, and an Appellate Division panel affirmedthe trial court’s judgment. The panel rejected Likakis’sarguments that the trial court lacked jurisdiction to enforce aterm of Likakis’s PTI agreement and that the agreement could beenforced only during the one-year period of PTI supervision.The panel held that the language of the indemnificationprovision was clear and that Providence, as a third-partybeneficiary of that agreement, was entitled to enforce theindemnification provision in the parties’ civil litigation. We granted Likakis’s petition for certification. 230 N.J. 414 (2017). III. Likakis argues that no court other than the PTI court hadjurisdiction to enforce the PTI agreement. He asserts that thePTI agreement is analogous to a criminal sentence, and that itwas negotiated for the benefit of the State, not to compensateProvidence. Likakis contends that even if a civil court had theauthority to enforce a provision of his PTI agreement, any suchauthority expired at the conclusion of his PTI supervision. 12 Providence argues that the trial court had jurisdiction toenforce the PTI agreement pursuant to Article VI, Section 3,Paragraph 2 of the New Jersey Constitution, which confersoriginal jurisdiction on the Superior Court “in all causes.”Providence asserts that the trial court properly found that itis the third-party beneficiary of Likakis’s PTI agreement withthe State, and that the State refrained from prosecuting Likakisin consideration for Likakis’s agreement to pay restitution toProvidence. Providence contends that Likakis’s indemnificationobligation survived the expiration of the one-year period of PTIsupervision. IV. A. We review two determinations: the motion judge’s grant ofpartial summary judgment and the trial court’s determinationfollowing a non-jury trial. Appellate review of a summary judgment decision is premisedon the same standard that governs the motion judge’sdetermination. Bhagat v. Bhagat, 217 N.J. 22, 38 (2014).Pursuant to that standard, a court grants summary judgment “ifthe pleadings, depositions, answers to interrogatories andadmissions on file, together with the affidavits, if any, showthat there is no genuine issue as to any material factchallenged and that the moving party is entitled to a judgment 13 or order as a matter of law.” R. 4:46-2(c); see also Brill v.Guardian Life Ins. Co. of Am., 142 N.J. 520, 540 (1995). “Whenno issue of fact exists, and only a question of law remains,this Court affords no special deference to the legaldeterminations of the trial court.” Templo Fuente De Vida Corp.v. Nat’l Union Fire Ins. Co., 224 N.J. 189, 199 (2016); seeFreedom from Religion Found. v. Morris Cty. Bd. of ChosenFreeholders, 232 N.J. 543, 553 (2018). We uphold the trial court’s factual findings in a non-jurytrial “if they are based on credible evidence in the record.”Motorworld, Inc. v. Benkendorf, 228 N.J. 311, 329 (2017). “Tothe extent that the trial court interprets the law and the legalconsequences that flow from established facts, we review itsconclusions de novo.” Ibid.; accord Manalapan Realty, L.P. v.Twp. Comm. of Manalapan, 140 N.J. 366, 378 (1995). B. PTI “is an alternative procedure to the traditional processof prosecuting criminal defendants.” State v. Leonardis, 71 N.J. 85, 89 (1976). It exists “to provide prosecutors analternate method to dispose of charges levied against qualifiedapplicants consistent with the interest of the applicant and theoverall interests of society and the criminal justice system.”State v. Brooks, 175 N.J. 215, 223 (2002). PTI is “specificallydesigned to avoid a trial and the stigma accompanying a verdict 14 of guilt to any criminal offense.” State v. Bell, 217 N.J. 336,347 (2014). When it adopted the PTI statute, N.J.S.A. 2C:43-12 to -22,the Legislature declared it to be the State’s public policy “toprovide uniform opportunities to avoid prosecution for acriminal offense when early rehabilitation services orsupervision may deter future criminal behavior, or when anapplicant might be harmed by imposition of criminal sanctions.”Bell, 217 N.J. at 347 (citing N.J.S.A. 2C:43-12(a)(1), (2)).Although “the goal of expeditious disposition is certainlyimportant and central to the PTI concept, it is at the same timesubordinate to the rehabilitative function of PTI.” Id. at 346(quoting Leonardis, 71 N.J. at 98). In accord with the statutory framework, Rule 3:28 and itsGuidelines prescribed the procedure by which a designated PTIjudge determines whether a criminal defendant will be admittedto this diversionary program.4 Under the version of Rule 3:28 in4 Rule 3:28, the PTI Guidelines, and the Official Comments that govern this appeal were repealed and replaced, effective July 1, 2018. The new rules, R. 3:28-1 to -10, “are designed to realign the PTI program to its original purpose to divert from prosecution first time offenders who would benefit from its rehabilitative components.” Notice to the Bar: Proposed New Court Rules 3:28-1 through 3:28-10 (Pretrial Intervention) 6 (Aug. 16, 2017). In addition to amending the admission process for certain offenders, the new rules incorporate certain provisions from Rule 3:28 and the PTI Guidelines. Ibid. We rely on the version of Rule 3:28 and the accompanying Guidelines and Comments that governed when Likakis was admitted to PTI. 15 effect when Likakis applied for PTI, a PTI application wasrequired to be filed “at the earliest possible opportunity,including before indictment, but in any event no later thantwenty-eight days after indictment.” R. 3:28(h). Withintwenty-five days of the submission of the application, thecriminal division manager would evaluate that application andmake a recommendation. Ibid. The prosecutor would then reviewthe application and advise the defendant whether the applicationwas accepted or rejected. Ibid. The defendant was permitted toappeal the rejection of his or her PTI application to thePresiding Judge of the Criminal Division or the judge overseeingthe matter. Ibid. So that PTI will advance the Legislature’s primary goal ofrehabilitation, an applicant’s admission into PTI depends on hisor her “amenability to correction, responsiveness torehabilitation and the nature of the offense.” N.J.S.A. 2C:43-12(b)(1). The statute prescribes seventeen criteria foradmission to PTI. See N.J.S.A. 2C:43-12(e). When Likakisapplied for PTI, Rule 3:28 and its Guidelines supplemented thestatutory criteria. See Pressler & Verniero, Current N.J. CourtRules, Guideline 3 to R. 3:28, at 1292-93 (2018). The statute, Rule 3:28, and the Guidelines defined theparameters of a PTI participant’s supervisory treatment. Suchtreatment was “for such period, as determined by the designated 16 judge or the assignment judge, not to exceed three years.”N.J.S.A. 2C:43-13(c). When a defendant was accepted into PTI,the designated judge was authorized, “on the recommendation ofthe criminal division manager and with the consent of theprosecutor and the defendant,” to postpone all furtherproceedings against that defendant on his or her charges for thespecified period. R. 3:28(b). “The terms and duration of the supervisory treatment shallbe set forth in writing, signed by the prosecutor[,] and agreedto and signed by the participant” and his or her counsel if theparticipant is represented. N.J.S.A. 2C:43-13(a). Aparticipant’s violation of his or her PTI conditions may“warrant[] the participant’s dismissal from the supervisorytreatment program.” N.J.S.A. 2C:43-13(e). In that event, “thecharges against the participant may be reactivated,” or “theconditions of continued participation in that or anothersupervisory treatment program” may be modified. Ibid. At the conclusion of the prescribed period of supervisorytreatment, on the recommendation of the criminal divisionmanager and with the consent of the prosecutor and thedefendant, the PTI judge was authorized to dismiss thecomplaint, indictment, or accusation against the defendant; orto further postpone all proceedings if the maximum period ofthree years has not expired. R. 3:28(c)(1), (2); see also17 N.J.S.A. 2C:43-13(d) (providing for dismissal with prejudice,with prosecutor’s consent, of PTI participant’s complaint,indictment, or accusation upon completion of supervisorytreatment). Alternatively, the PTI judge was permitted to“order the prosecution of the defendant to proceed in theordinary course” on the written recommendation of the criminaldivision manager or the prosecutor, or on the court’s ownmotion. R. 3:28(c)(3). The victim of a PTI applicant’s alleged offenses is not aparty to a PTI proceeding. See generally N.J.S.A. 2C:43-12,-13; R. 3:28. The PTI statute and court rule, however,recognize the importance of a victim’s concerns in PTIdeterminations. Among other criteria, the statute requiresprosecutors to consider “[t]he desire of the complainant orvictim to forego prosecution,” N.J.S.A. 2C:43-12(e)(4), and“[t]he needs and interests of the victim and society,” N.J.S.A.2C:43-12(e)(7).5 Case law also acknowledges the importance of the victim’sviews. See, e.g., State v. Nicholson, 451 N.J. Super. 534, 5545 The importance of the victim’s views was underscored in a statutory amendment and the amendment to Rule 3:28 that followed the PTI proceeding at issue here. In nearly identical language,N.J.S.A. 2C:43-12(e) and Rule 3:28-4(c) require prosecutors and program directors to “give due consideration to the victim’s position” on whether the defendant should be admitted into PTI. See L. 2015, c. 98; R. 3:28-4(c). 18 (App. Div. 2017) (noting that victim’s opposition to PTI isappropriate factor to be considered); State v. Imbriani, 291 N.J. Super. 171, 180-81 (App. Div. 1996) (same); cf. State v.Ridgway, 208 N.J. Super. 118, 127 (Law Div. 1985) (finding thatvictim’s family’s opposition to defendant’s admission “is afactor which must be considered” but is not conclusive becauselikely not based on recognized PTI considerations). The victim of a PTI applicant’s alleged offenses is thusafforded an opportunity to state his or her view on theapplication. Although it is not dispositive, the victim’s viewmust be considered when a defendant’s application for PTI isdetermined, and conditions of PTI are imposed. C. 1. “[R]estitution serves to rehabilitate the wrongdoer and tocompensate the victim of the wrongdoer’s conduct.” State v.Newman, 132 N.J. 159, 169 (1993). It “extends beyond theconcept of simple justice to one aggrieved and entitled torestitution of that unlawfully taken or reparation for lossunlawfully inflicted.” State v. Harris, 70 N.J. 586, 592(1976). “[C]ompensatory payments made pursuant to a restitutionorder 'can have correctional worth, regardless of whether theoffender is required only to disgorge the fruits of his offenseor to compensate persons for the injuries and losses suffered as 19 a result of his crime.’” State v. DeAngelis, 329 N.J. Super. 178, 186 (App. Div. 2000) (quoting In re Parole Application ofTrantino, 89 N.J. 347, 358 (1982)). An order of restitution is designed “to strip a defendantof pecuniary gain from the crime where that gain is directlyrelated to the crime itself and the defendant has the ability(though not necessarily the immediate means) to pay.” State v.Pulasty, 259 N.J. Super. 274, 283 (App. Div. 1992). As such, arestitution order is distinct “from a civil judgment, which isintended to make the victim whole.” Felicioni v. AOC, 404 N.J.Super. 382, 394 (App. Div. 2008). Under the Rule that governed Likakis’s admission into PTI,a court was authorized to include a restitution requirement aspart of a PTI participant’s service plan. Pressler & Verniero,Guideline 3(k) to R. 3:28, at 1292. When addressing restitutionunder that Rule, we consider the law that governs restitutionwhen it is imposed as a condition of probation or otherwise madepart of a convicted defendant’s criminal sentence. See Pressler& Verniero, Official Comment to Guideline 3 to R. 3:28, at 1294(incorporating procedures for setting restitution in sentencingprescribed in State in Interest of D.G.W., 70 N.J. 488, 503-06(1976), and Harris, 70 N.J. at 597-99, into PTI restitutiondeterminations); see also State v. Jamiolkoski, 272 N.J. Super. 326, 329 (App. Div. 1994) (discerning “no reason why standards 20 governing the resolution of issues where restitution is acondition of probation should not apply in the same manner whenrestitution is a condition of defendant’s participation in[PTI]”). In criminal sentencing, a court imposes restitution inaddition to a term of imprisonment or probation if “(1) [t]hevictim, or in the case of a homicide, the nearest relative ofthe victim, suffered a loss; and (2) [t]he defendant is able topay or, given a fair opportunity, will be able to payrestitution.” N.J.S.A. 2C:44-2(b). The statutory constraintsensure that the defendant will be capable of paying therestitution amount, thus achieving the rehabilitative goal.Newman, 132 N.J. at 172-73; Trantino, 89 N.J. at 360. A court imposing restitution must “conduct at least asummary hearing” to determine the ability to pay. State v.Paladino, 203 N.J. Super. 537, 547 (App. Div. 1985); see alsoHarris, 70 N.J. at 598-99; D.G.W., 70 N.J. at 501-03. Insetting the restitution amount and the schedule for payment,“the court shall take into account all financial resources ofthe defendant, including the defendant’s likely future earnings,and shall set the amount of restitution so as to provide thevictim with the fullest compensation for loss that is consistentwith the defendant’s ability to pay.” N.J.S.A. 2C:44-2(c)(2). 21 When a sentencing court has not conducted a meaningfulevaluation of a defendant’s ability to pay, appellate courtsroutinely vacate restitution orders and remand forreconsideration. See, e.g., State v. Pessolano, 343 N.J. Super. 464, 479 (App. Div. 2001) (remanding for reconsideration wheresentencing judge held no ability-to-pay hearing, restitutionamount “was made subject to an unknown credit” for amount to bepaid by codefendant, and restitution order lacked “fixedresponsibility in terms of the obligation of either defendant”);State v. McLaughlin, 310 N.J. Super. 242, 264-65 (App. Div.1998) (vacating restitution award and remanding forreconsideration in absence of any assessment of defendant’sability to pay); State v. Scribner, 298 N.J. Super. 366, 372(App. Div. 1997) (reversing restitution order imposing joint andseveral liability on codefendants and remanding forreconsideration where State conceded restitution amount did notreflect victims’ actual loss and court failed to assess eachdefendant’s ability to pay). Thus, in the sentencing context, arestitution order will not survive appellate review if thesentencing court has not specified the restitution amount anddetermined whether the defendant will be capable of paying theamount required. 2. 22 For purposes of PTI, Rule 3:28 incorporated the coreprinciples that govern restitution awards in criminalsentencing. First, in PTI proceedings as in sentencing,restitution exists to serve a rehabilitative goal and tocompensate the victim. A restitution requirement could beincluded as part of a participant’s service plan “when such arequirement promises to aid the rehabilitation of the offender.”Pressler & Verniero, Guideline 3(k) to R. 3:28, at 1292.Indeed, Guideline 3(k) provided that admission to PTI could notbe “denied solely on the basis of anticipated inability to meeta restitution requirement,” and authorized “symbolic or partialrestitution” when appropriate to further rehabilitation. Ibid. Second, a PTI court was authorized to impose a restitutionobligation only after a careful assessment in a hearing of thedefendant’s ability to pay. Pressler & Verniero, OfficialComment to Guideline 3 to R. 3:28, at 1294. PTI Guideline 3(k)mandated that any restitution requirement “be judiciallydetermined at the time of enrollment.” See also Jamiolkoski,272 N.J. Super. at 329-30 (reversing and remanding restitutionorder in light of trial court’s failure to assess PTIparticipant’s ability to pay); Pressler & Verniero, cmt. 3 on R.3:28 (“Although admission may be conditioned on restitution,there must be a hearing to determine fair restitution if theamount is in dispute as well as the defendant’s ability to 23 pay.”). Thus, before entering a restitution order, the courtwas required to quantify the obligation to be imposed anddetermine whether the defendant would be in a position to meetthat obligation. Third, the court rule governing Likakis’s admission intoPTI maintained a clear distinction between a PTI restitutionorder and any civil claim that may arise from the PTIparticipant’s offenses against the victim. Subject to theconstraints of Rule 3:28(c)(1), the court was not required toensure that the victim will be compensated by insisting that theparticipant pay the entire restitution during the PTI period.As stated in the Official Comment to Guideline 3, [f]ull restitution need not be completed during participation in the program. In determining whether a restitution requirement has been fulfilled, the designated judge shall consider good-faith efforts by the defendant. In appropriate cases, at the conclusion of participation, a civil judgment by confession may be entered by the court. However, restitution should never be used in PTI for the sole purpose of collecting monies for victims. [Pressler & Verniero, Official Comment to Guideline 3 to R. 3:28, at 1294-95.] Thus, the court was permitted to terminate PTI and dismissthe complaint, indictment or accusation on the Civil Divisionmanager’s recommendation and with the parties’ consent pursuant 24 to N.J.S.A. 2C:43-13(c) and Rule 3:28(c)(1), even if the PTIparticipant had not paid the entire restitution amount. Evidence of a restitution condition imposed in PTI,however, was “not admissible against [the participant] in anysubsequent civil or criminal proceeding.” Pressler & Verniero,Guideline 3(k) to R. 3:28, at 1292. Nor could a victim rely in acivil action on the participant’s disclosures regarding his orher charge in the course of supervisory treatment. Rule3:28(c)(5) provided that “[n]o statement or other disclosureregarding the charge or charges against the participant made ordisclosed by a participant in [PTI] to a person designated toprovide supervisory treatment” shall be “admitted as evidence inany civil or criminal proceeding against the participant.”6Consistent with its rehabilitative purpose, a PTI agreement isnot intended to serve as the basis for the imposition of civilliability.76 The Rule provided for an exception for statements by the criminal division manager to the prosecutor or court as to whether “the participant is satisfactorily responding to supervisory treatment.” R. 3:28(c)(5).7 With the exception of the procedure for the entry of a civil judgment following the termination of a participant’s PTI supervision, Rule 3:28-5(d) incorporates the procedures for the entry of a restitution condition that were prescribed in Guideline 3(k) and the Official Comment to Guideline 3. Rule 3:28-5(d) provides that 25 V. Those principles provide the framework for ourdetermination of this appeal. When the PTI court entered its order admitting Likakis toPTI, Providence had already incurred costs in the amount of$11,321.89 by virtue of its insurance payments to RSI Bank andfaced the prospect of substantial additional liability to RSIBank. The record indicates that Providence had no objection toLikakis’s PTI admission, as long as restitution in the amount of$11,321.89, and indemnification for future liabilities to RSIBank, were made conditions of his admission. The PTI court appropriately took into account Providence’sview on Likakis’s admission into PTI and its requestedconditions. See N.J.S.A. 2C:43-12(e)(4), -12(e)(7). The PTIcourt did not, however, take the steps necessary to properly [a] restitution or community service requirement, or both, may be included as part of an individual’s service plan when such a requirement promises to aid the rehabilitation of the offender. Any such requirement and its terms shall be judicially determined at the time of enrollment following recommendation by the criminal division manager and consent by the prosecutor. Evidence of the restitution condition is not admissible against defendant in any subsequent civil or criminal proceeding. Admission to the program shall not be denied solely on the basis of anticipated inability to meet a restitution requirement. 26 impose the indemnification requirement as a condition of PTI.It does not appear that the prosecutor or PTI Director presentedevidence of Providence’s past and prospective losses due to thealleged arson, or attempted to estimate Providence’s prospectiveliability to RSI Bank. The record reflects no ability-to-payhearing at which the PTI court could assess Likakis’s currentand future resources. The PTI court did not impose a specificrestitution obligation or payment schedule for any restitutionamount beyond the $11,321.89 that Likakis was required to pay. Instead, the PTI order generally required Likakis to“[p]rotect/compensate, indemnify and hold harmless [Providence]from any and all claims that may be brought against [Providence]by RSI Bank.” That provision did not quantify Likakis’srestitution obligation, let alone ensure that the obligationcomported with his ability to pay. Indeed, until judgment wasentered in favor of RSI Bank against Providence, noindemnification obligation could be defined. In short, the indemnification provision set forth inLikakis’s PTI agreement did not conform to the requirements of avalid restitution condition of PTI. Based on the record, it appears that at the close ofLikakis’s one-year PTI supervisory period, the prosecutor didnot raise before the PTI court the question of Likakis’sobligation to indemnify and hold harmless Providence for future 27 losses, or request that the court extend PTI or dismiss Likakisfrom the program. See R. 3:28(c)(2) (providing for extension ofPTI period up to three years); R. 3:28(c)(3) (addressing ordersthat PTI participant’s prosecution resume); see also N.J.S.A.2C:43-13(e) (authorizing PTI court to determine after summaryhearing whether PTI participant’s violation of PTI conditions“warrants the participant’s dismissal from the supervisorytreatment program or modification of the conditions of continuedparticipation in that or another supervisory treatmentprogram”). There is no indication that any party or the PTIcourt addressed the indemnification provision at that stage. Instead, the PTI court terminated Likakis’s PTI period anddismissed his indictment with no order regarding any outstandingrestitution obligation. With his PTI proceedings thusconcluded, Likakis had no obligation to make additional paymentsunder the restitution provision of the PTI court’s May 14, 2014order. Even if the PTI court had imposed an appropriaterestitution condition on Likakis, requiring him to pay aspecific amount based on his ability to pay, that conditioncould not have been properly admitted in this civil matter. SeePressler & Verniero, Guideline 3(k) to R. 3:28, at 1292. Theinvalid indemnification provision of the PTI agreement wasclearly inadmissible in this case, either as the basis for the 28 motion court’s grant of partial summary judgment or as thedispositive evidence in the non-jury trial. Ibid.8 Accordingly, we hold that the trial court improperlyenforced the indemnification provision and entered judgment inProvidence’s favor. VI. The judgment of the Appellate Division is reversed, and thematter is remanded to the trial court for further proceedingsconsistent with this opinion. CHIEF JUSTICE RABNER and JUSTICES LaVECCHIA, ALBIN, FERNANDEZ-VINA, SOLOMON, and TIMPONE join in JUSTICE PATTERSON’s opinion.8 Before the trial court and on appeal, the parties’ dispute centered on two issues: whether the trial court in this civil matter had jurisdiction to enforce the PTI court’s restitution order, and whether Providence was a third-party beneficiary of the PTI agreement. Neither question is central to our determination of this appeal. Instead, our decision rests on the PTI statute, the version of Rule 3:28 in effect at the relevant time, and the now-repealed PTI Guidelines. 29