Opinion ID: 619159
Heading Depth: 2
Heading Rank: 1

Heading: Loss Calculation Methodology

Text: On appeal, Mr. Snow disputes the district court's methodology in using the certified assessor's current market value to calculate the loss attributable to him on the Archie property, claiming the district court should have used his gain as an alternative measure of loss. In so doing, he again claims no fair market value can be determined for the purpose of calculating actual loss. In addressing this issue, we take instruction from our holdings in United States v. Washington, 634 F.3d 1180 (10th Cir.), cert. denied, ___ U.S. ___, 132 S.Ct. 300, ___ L.Ed.2d ___ (2011), and United States v. James, 592 F.3d 1109 (10th Cir. 2010), which similarly involved mortgage-fraud schemes and loss calculations. In Washington, we explained sentences are reviewed under an abuse of discretion standard for procedural and substantive reasonableness. 634 F.3d at 1184. Under this standard factual findings regarding loss calculations are reviewed for clear error and loss calculation methodology de novo.  Id. With respect to the applicable legal principles, Guidelines § 2B1.1(b) increases a defendant's base offense level for fraud according to the amount of the loss and [t]he court is instructed to use the greater of actual or intended loss. Id. (relying on U.S.S.G. § 2B1.1 cmt. n. 3(A)). The Guidelines define `actual loss' as `the reasonably foreseeable pecuniary harm that resulted from the offense.' Id. (quoting U.S.S.G. § 2B1.1 cmt. n. 3(A)(i)). However, as we pointed out in James, [t]he sentencing court need only make a reasonable estimate of the loss. 592 F.3d at 1114 (internal quotation marks omitted). We further explained actual loss should be measured by the net value, not the gross value, of what was taken when the defendant pledged collateral to secure a fraudulent loan. See id. As a result, in Washington and James, we held that [w]here a lender has foreclosed and sold the collateral, the net loss should be determined by subtracting the sales price from the outstanding balance on the loan. Washington, 634 F.3d at 1184 (relying on James, 592 F.3d at 1114). However, when no actual sales price is available to calculate loss, the Guidelines permit a district court to estimate loss `based on available information.' James, 592 F.3d at 1116 (quoting U.S.S.G. § 2B1.1 cmt. n. 3(C)). Moreover, the Guidelines recommend such loss be calculated based on fair market value where no sales price is available. See § 2B1.1, cmt. n. 3(C)(i); United States v. Messner, 107 F.3d 1448, 1455-56 (10th Cir.1997). Only when the loss is not reasonably determinable may a court use the gain that resulted from the fraud as an alternative measure. Washington, 634 F.3d at 1184 (relying on U.S.S.G. § 2B1.1 cmt. n. 3(B)). The defendant's gain may be used only as an alternate estimate of that loss; it may not support an enhancement on its own if there is no actual or intended loss to the victims. Id. (internal quotation marks omitted). Here, with respect to the sold properties, the district court followed Washington and James to determine net loss by subtracting the sales price from the outstanding balance on the loan. However, because no actual sales price was available to calculate the loss on the Archie property, the Guidelines allowed the district court to estimate the fair market value of the property loss based on the available information. In this case, the information available to the district court for calculating the reasonable estimated fair market value included: (1) the county's assessed valuation, to which Mr. Snow objected and is not at issue on appeal; and (2) the certified assessor's current valuation of the property, which the district court used to calculate his sentence under § 2B1.1(b)(1)(J). The government offered this latter valuation after Mr. Snow objected to the county assessor's valuation and requested the district court use the difference between the mortgage amount and the price for which it would sell . . . on the open market.  Absent actual sale of the house, the certified assessor's valuation of the Archie property provided a reasonable estimate of the fair market value of the property at the time of sentencing, which is arguably the equivalent to the open market value Mr. Snow requested. [2] In other words, the government met its burden in providing a reasonable valuation estimate for calculating the actual loss on the property. Moreover, given Mr. Snow has not offered any other methodology for calculating the fair market value or reasonable estimated loss valuation, we cannot say the district court erred in using the only information available to it in estimating the loss. Because the district court was able to reasonably estimate the fair market value for the loss calculation, we reject Mr. Snow's contention actual loss could not be reasonably determined for the purpose of alternatively using his gain on sale of the property as a measure of loss. In sum, our de novo review establishes the district court did not err in its methodology in using the certified assessor's valuation of the Archie property for the purpose of assessing the loss attributable to Mr. Snow.