Opinion ID: 867339
Heading Depth: 2
Heading Rank: 2

Heading: State v. Wilkinson

Text: ¶19 The Town of Gilbert argues and the court of appeals concluded that our decision in Wilkinson created a per se rule that the entire amount of consideration paid by the victim in an unlicensed contractor case is the proper amount of restitution, regardless of any benefit conferred on the victim. We disagree that Wilkinson created such a rule. Although Wilkinson also involved the restitution due from an unlicensed contractor, it decided an entirely different issue from the one now facing the court. ¶20 In Wilkinson, John Porter was convicted of contracting without a license under § 32-1151. 202 Ariz. at 28, ¶ 3, 39 P.3d at 1132. Porter had contracted with two homeowners, T.S. and N.L., to perform remodeling work. Id. ¶ 2. T.S. and N.L. paid Porter $2854.77 and $9040.27, respectively. Id. At Porter’s restitution hearing, the trial court awarded $22,429.11 to T.S. and $22,365.67 to N.L., which it calculated by “adding 3 The Town of Gilbert has cited no published opinion from any other jurisdiction holding that the entire amount of consideration paid by homeowner-victims must be disgorged as restitution, nor has our research revealed any such authority. - 12 - the amounts each victim had paid to Porter to the estimated cost of repairing Porter’s faulty work and finishing work he left incomplete.” Id. ¶ 3. ¶21 This Court concluded that the consideration paid by T.S. and N.L. was the “loss” that flowed directly from Porter’s illegal conduct. Id. at 29, ¶ 9, 39 P.3d at 1133. Any damages for repairing T.S’s and N.L.’s homes or completing the work were not “direct” because those damages required the occurrence of a second causal event unrelated to the criminal activity itself - that is, Porter’s faulty and unprofessional performance. Id. ¶¶ 9-10. ¶22 Although Wilkinson explored the extent to which “courts can order restitution for victims of an unlicensed contractor who performs incomplete and faulty work,” id. at 28, ¶ 1, 39 P.3d at 1132, and more specifically, whether losses not resulting from criminal conduct are subject to restitution, it never addressed whether losses incurred by victim-homeowners may be reduced by benefits conferred upon them.4 Because it did not 4 By focusing on payments made by the victim to the defendant, Wilkinson did not adopt a per se rule for all unlicensed contractor cases, but instead recognized that a victim must incur a loss to recover any restitution. A defendant can violate § 32-1151 without receiving any payments. See A.R.S. § 32-1151 (making it unlawful for an unlicensed contractor to engage in the business of contracting without a license, to submit bids or proposals, to respond to requests for - 13 - address the issue before us, Wilkinson is not dispositive.5 ¶23 We recognize the legislature’s strong interest in protecting the public from unlicensed contractors, which is evidenced by the onerous requirements for licensure. The applicant seeking a license must post a bond, obtain experience or train at an accredited institution, and pass a written examination; he may also have to submit fingerprints for a background check. A.R.S. § 32-1122(B)(2), (F). Harsh qualification or proposals for construction services, to act or offer to act as a licensed contractor, or to purport to have the capacity of a licensed contractor). Because the fact of payment is not determinative as to the commission of the offense, it would be anomalous to treat such payments as conclusively establishing a right to restitution in the amount paid. 5 Our dissenting colleague asserts that Wilkinson governs the result in this case and that principles of stare decisis dictate adherence to it. We disagree. Before applying the doctrine of stare decisis, a court must first identify the legal principle entitled to respect. E.g., Michael Abramowicz & Maxwell Stearns, Defining Dicta, 57 Stan. L. Rev. 953, 957 (2005) (noting that before applying stare decisis, a court “must first determine just what that case purports to establish”). As we explained in paragraphs 19-22, Wilkinson simply did not address the issue presented here. There are good reasons not to over-read Wilkinson as holding that a homeowner is entitled to restitution for all amounts paid to an unlicensed contractor regardless of any benefits the homeowner received. Over-reading a decision can be corrosive to the rule of law because it may lead a court to ignore concerns not present in the earlier case and to embrace conclusions that are contrary to common sense or experience. This case illustrates this point; treating Wilkinson as dispositive could lead to results that are contrary to the language of the restitution statute, which contemplates that victims will recover their losses, not a windfall. - 14 - consequences await the unlicensed contractor. Violation of § 32-1151 is a class one misdemeanor, A.R.S. § 32-1164(A)(2), for which incarceration, probation, and statutory fines serve as punishment, id. §§ 13-707, 32-1164(B). Conviction may also disqualify the defendant from obtaining a license, § 32-1122(D), (E).6 ¶24 The State thus already has many tools with which to punish unlicensed contractors. Reading Wilkinson to forge another tool - a rule of total disgorgement regardless of any benefit conferred on the victim – would unnecessarily strain Arizona’s restitution scheme and may lead to absurd or troubling results. ¶25 Consider, for example, the situation in which an unlicensed contractor obtained $5000 from a homeowner to perform construction work. Under the Town’s reading of Wilkinson, the unlicensed contractor has committed a crime under § 32-1151 and the homeowner has incurred a $5000 “loss.” See 202 Ariz. at 29, ¶ 9, 39 P.3d at 1133. Assume further, however, that one day 6 After Matykiewicz was convicted, the legislature amended A.R.S. § 32-1164 to require unlicensed contractors to pay transaction privilege taxes as a condition of probation. 2007 Ariz. Sess. Laws, ch. 174, § 1 (1st Reg. Sess.). This statute also demonstrates the legislature’s understanding that one convicted of contracting without a license may retain some compensation, but must pay appropriate taxes on it. - 15 - later the unlicensed contractor decided not to do the job and returned the $5000. To be sure, a crime has still been committed under § 32-1151, but the homeowner has suffered no loss. No reasonable jurist would conclude, and the legislature could not have intended, that the unlicensed contractor must pay $5000 in restitution in addition to the $5000 already returned. Such an outcome would result in a windfall for the victim. The victim would similarly receive a windfall if an unlicensed contractor flawlessly performed all work for which the victim contracted, but then was required to disgorge all payments.7 We find no significant difference between returning cash, one form of value, and returning other forms of value, such as permits, chattels, services, or other property. See Shepard, 269 F.3d at 887-88. “Loss” is a concept rooted in value, not solely in the exchange of money. We thus decline to read Wilkinson as creating an inflexible rule of total disgorgement regardless of 7 The concern has been raised that requiring defendants to pay as restitution the full amount of consideration received for their services may encourage homeowners to knowingly hire unlicensed contractors because upon conviction for contracting without a license, the defendant must refund all payments. See A.R.S. § 32-1153 (preventing unlicensed contractors from bringing civil action to recover payment). Such conduct, however, might render the homeowner an accomplice and forfeit the right to restitution. See State v. Wilkinson, 198 Ariz. 376, 383, ¶ 36, 10 P.3d 634, 641 (App. 2000) (Ryan, J., dissenting), overruled by Wilkinson, 202 Ariz. at 31, 39 P.3d at 1135. - 16 - value conferred. ¶26 We are persuaded that determining a victim’s “loss” requires consideration of any benefits conferred on the victim. “Most often there will be no reductions, as criminals rarely confer a benefit on their victims.” Tzitzikalakis, 864 N.E.2d at 47. If value is conferred, however, courts must consider such benefits in determining a victim’s loss.