Opinion ID: 1428019
Heading Depth: 2
Heading Rank: 2

Heading: Applying RAP 2.5(a)(3) to the Excessive Fines Claim

Text: We now review whether Johnson's claimed constitutional errors warrant review under RAP 2.5(a)(3). Because RAP 2.5(a)(3) is an exception to the general rule that parties cannot raise new arguments on appeal, we construe the exception narrowly by requiring the asserted error to be (1) manifest and (2) `truly of constitutional magnitude'. State v. McFarland, 127 Wash.2d 322, 333, 899 P.2d 1251 (1995) (quoting State v. Scott, 110 Wash.2d 682, 688, 757 P.2d 492 (1988)). RAP 2.5(a)(3) was not designed to allow parties a means for obtaining new trials whenever they can `identify a constitutional issue not litigated below.' Scott, 110 Wash.2d at 687, 757 P.2d 492 (quoting State v. Valladares, 31 Wash.App. 63, 76, 639 P.2d 813 (1982), aff'd in part, rev'd in part, 99 Wash.2d 663, 664 P.2d 508 (1983)). If the record from the trial court is insufficient to determine the merits of the constitutional claim, then the claimed error is not manifest and review is not warranted. McFarland, 127 Wash.2d at 333, 899 P.2d 1251 (citing State v. Riley, 121 Wash.2d 22, 31, 846 P.2d 1365 (1993)). Cf. State v. Contreras, 92 Wash.App. 307, 311-14, 966 P.2d 915 (1998). McFarland held an error is manifest if it results in actual prejudice to the defendant. An equally correct interpretation of manifest error was given in State v. Lynn, 67 Wash.App. 339, 345, 835 P.2d 251 (1992), where the court stated, Essential to this determination is a plausible showing by the defendant that the asserted error had practical and identifiable consequences in the trial of the case. Under Lynn, an alleged error is manifest only if it results in a concrete detriment to the claimant's constitutional rights, and the claimed error rests upon a plausible argument that is supported by the record. To determine whether a newly claimed constitutional error is supported by a plausible argument, the court must preview the merits of the claimed constitutional error to see if the argument has a likelihood of succeeding. Reading manifest in this way is consistent with McFarland 's holding that exceptions to RAP 2.5(a) should be construed narrowly. The policy behind RAP 2.5(a)(3) is simply this: Appellate courts will not waste their judicial resources to render definitive rulings on newly raised constitutional claims when those claims have no chance of succeeding on the merits. Johnson's excessive fines claim involves a genuine constitutional issue, but the record is insufficiently developed to evaluate its merits. Without a developed record, the claimed error cannot be shown to be manifest, and the error does not satisfy RAP 2.5(a)(3). See Riley, 121 Wash.2d at 31, 846 P.2d 1365 (declining to consider defendant's Fourth Amendment claim because the record was insufficiently developed to consider the claim). Johnson claims the $500,000 fine violates the Excessive Fines Clause under the grossly disproportional test recently adopted in United States v. Bajakajian, 524 U.S. 321, 118 S.Ct. 2028, 2036, 141 L.Ed.2d 314 (1998). The Eighth Amendment states: Excessive bail shall not be required, nor excessive fines imposed, nor cruel and unusual punishments inflicted. U.S. Const. amend VIII. To determine whether Johnson's claim is manifest under RAP 2.5(a)(3), we will assume the Excessive Fines Clause applies to Johnson's fine, [6] and assume the standard set out in Bajakajian applies in this case. Under Bajakajian, a fine is excessive if it is grossly disproportional to the gravity of the defendant's offense. The record lacks the necessary information to determine the gravity of Johnson's egregious violations of the MBPA and CPA. Johnson claims the gravity of his offenses is measured by the $32,254 restitution award, and he then claims the $500,000 fine is disproportional to the amount of restitution. However, the $32,254 restitution award does not represent the total gravity of Johnson's illegal conduct over the two years of WWJ's operation. When the State filed this action, it included only restitution claims for those few clients and third-party service providers who had come forward to complain to the State about WWJ's conduct. Even if the restitution award had included every single injured person's claim, the gravity of Johnson's violations is not limited just to the actual damages inflicted. See RCW 19.146.050 (discussed below). All but one of Johnson's 250 violations involved improper handling of clients' funds-funds which were not Johnson's property. Johnson did not deposit clients' funds in the statutorily required trust accounts, designated and maintained for the benefit of borrowers, and exempt from execution, attachment, or garnishment. See RCW 19.146.050. Johnson commingled his clients' funds with other operating funds, and withdrew money from those commingled accounts for purposes other than refunds to clients or payments to third party service providers, again violating the provisions of RCW 19.146.050. Johnson violated the fiduciary trust of every single client with whom he did business by improperly handling client funds. Every customer whose funds were improperly handled was potentially harmed by Johnson's offenses, even if he or she did not suffer actual damages. The gravity of Johnson's offenses includes the gross violation of his fiduciary duty to his clients, but even more is involved. The gravity of Johnson's conduct also includes the greater potential harm to consumer confidence in the mortgage broker industry. That Johnson's conduct has negative impacts beyond those clients who suffered actual or potential damages is demonstrated by the Legislature's own findings: The legislature finds and declares that the brokering of residential real estate loans substantially affects the public interest. The practices of mortgage brokers have had significant impact on the citizens of the state .... It is the intent of the legislature to establish ... rules of practice and conduct of mortgage brokers to promote honesty and fair dealing with citizens and to preserve public confidence in the lending and real estate community. RCW 19.146.005 (emphasis added). Johnson's years of illegal mortgage brokering, especially at a time when the demand for such services was high, eroded the public confidence in the business. This must be taken into account when determining the gravity of Johnson's offenses for purposes of weighing the proportionality of the fine. In bringing this action under the CPA, the State had no need to attempt to delineate the total gravity of Johnson's conduct. In granting the State's motion for summary judgment, the trial court likewise had no need to delineate the full extent of harm actually and potentially caused by Johnson's illegal acts. [7] The record fails to reveal the total number of customers Johnson may have potentially harmed by mishandling their deposits. The State offered a conservative calculation that Johnson mishandled $148,834 of his clients' funds, but even this figure fails to represent the total gravity of Johnson's offenses. Since the record contains insufficient data to enable this court to grasp the total gravity of Johnson's offenses, we cannot determine the merits of Johnson's excessive fines claim. As such, the claimed error has not been shown to be manifest, and review is not warranted under RAP 2.5(a)(3).