Opinion ID: 2978318
Heading Depth: 4
Heading Rank: 1

Heading: Settlement Offset

Text: Elson first argues that the district court erred in including Bourke’s attorney fees in the restitution amount because Bourke released his claim for such attorney fees pursuant to a 1998 settlement with Schultz. As discussed above, in 1998, Bourke sold an attorney-fee claim of $962,000 then pending in California court to Elson, and also released his civil claims against Elson and several other co-defendants. During the restitution hearing, Bourke testified that the $962,000 in fees he sought in California court in connection with the Schultz litigation—the fees included in the claim he sold to Elson—comprised the same fees he listed in his victim statement of loss. In United States v. Bearden, 274 F.3d 1031 (6th Cir. 2001), this Court held “that a private settlement between a criminal wrongdoer and his victim releasing the wrongdoer from further liability does not preclude a district court from imposing a restitution order for the same underlying wrong.” Id. at 1041. Other circuits have reached similar conclusions. For example, in Gallant, the defendants settled with the banking institution victim for $60,000 in exchange for the victim’s agreement to release the defendants “from further liability.” 537 F.3d at 1249. The court found that the “settlement does not bar restitution” under the MVRA, noting that “[a] private settlement cannot abrogate [the mandatory] language” of the statute. Id. at 1250; see also United States v. Sheinbaum, 136 F.3d 443, 448 (5th Cir. 1998) (concluding that, because restitution is a penal rather than compensatory measure, a district court “possess[es] the discretion to impose restitution orders in spite of civil settlements”). Therefore, under No. 07-3778 United States v. Elson Page 27 Bearden and similar cases, the fact that Bourke settled his pending claims—including his fee petition—did not preclude the district court from awarding restitution. However, courts also have recognized that a defendant should not have to pay a victim for the same loss twice. In Bearden, although the court rejected the defendant’s argument that his $47,000 settlement with the victim prevented the sentencing court from ordering restitution, the court reduced the defendant’s restitution obligation by the amount the defendant paid in the settlement: In this case, Bearden would have his payment of $47,000 erase the rest of the $161,590 restitution imposed. As the Supreme Court [has] indicated . . . , the purposes of criminal restitution include punishment. It would be improper to permit private parties to release criminal wrongdoers from punishment. Thus, under our holding today Bearden still owes [the victim] $114,590 in restitution. Bearden, 274 F.3d at 1041; see also United States v. McDaniel, 398 F.3d 540, 555 (6th Cir. 2005) (noting that “the restitution statutes do not permit victims to obtain multiple recoveries for the same loss”). Thus, “when determining the amount of a restitution award under the MVRA, the court must ‘reduce restitution by any amount the victim received as part of a civil settlement’ . . . . to avoid[] the undesirable result of restitution effectuating a double recovery.” Gallant, 537 F.3d at 1250 (citation omitted). “[T]he burden of proving an offset should lie with the defendant.” Sheinbaum, 136 F.3d at 449. The restitution statute “allocates the various burdens of proof among the parties who are best able to satisfy those burdens.” Id. Because “the defendant should know the value of any compensation he has already provided to the victim in civil proceedings, . . . the burden should fall on him to argue for a reduction in his restitution order.” Id. Here, beyond proffering evidence of the settlement itself, Elson has not shown that Bourke received compensation for the attorney fees he now seeks. The record demonstrates that, although Bourke released his fee claim as part of the settlement, he never received compensation for the attorney fees. While Bourke received $2 million from Schultz in the settlement in exchange for the judgment worth approximately $2,052,000, his pending attorney-fee claim of $962,000 remained uncompensated. The district court therefore properly concluded that the settlement did No. 07-3778 United States v. Elson Page 28 not bar restitution for attorney fees and, thus, contrary to Elson’s argument, there was no double recovery.