Opinion ID: 3011222
Heading Depth: 2
Heading Rank: 1

Heading: The District Court's Restitution Or der

Text: Pursuant to the Mandatory Victims Restitution Act (the MVRA), codified at 18 U.S.C. S 3663A, the District Court ordered Simmonds to pay $20,000 as his share of the restitution owed to the victims and to the victims' insurance company. The District Court concluded that the total loss resulting from the criminal acts in question was $76,454. The court arrived at this sum based on information contained in Simmonds's Pr e-Sentence Investigation Report. The victims' insurance company paid a total of $65,939 for the loss caused by the fir e. In addition, the court ordered restitution in the amount of $2,000 to cover the insurance deductible paid by the victims, $7,000 representing the depr eciation attributable to the furniture destroyed in thefire, and $1,516 representing the clean renewal discount and no claim discount lost as a result of the insurance claim filed by the victims. Simmonds argues that the District Court erred by requiring him to compensate the victims for the depreciation attributable to furnitur e destroyed in the fire and for the value of the lost clean renewal discount and no claim discount because the District Court is prohibited by statute from awarding this type of r estitution. As its name suggests, the Mandatory Victims Restitution Act, which was enacted by Congress in 1996, mandates that defendants who are convicted of or plead guilty to certain crimes pay restitution to their victims. See 18 U.S.C. S 3663A(a)(1). The parties agree that Simmonds is subject to the provisions of the MVRA by virtue of his guilty plea to the federal offense of arson. Under the MVRA, a defendant must either return the pr operty damaged during commission of the crime in question or, if the defendant cannot do so, pay an amount equal to the gr eater of the 5 value of the property on the date of the damage, loss, or destruction; or the value of the property on the date of sentencing, less the value (as of the date the pr operty is returned) of any part of the property that is returned. 18 U.S.C. S 3663A(b)(1)(B) (emphasis added). Because the property at issue in this case was destr oyed, returning it is impossible. Therefore, we must deter mine whether the District Court's inclusion of the depreciation attributable to furniture destroyed in the fir e and of the value of the victims' lost insurance premium discounts was proper under the statute. We will consider each of the items in turn. 1. The Depreciation Attributable to the Victims' Furniture We first consider whether the District Court erred in calculating the value of the victims' furnitur e destroyed in the fire under S 3663A at its r eplacement value rather than at its market value. Market value refers to the actual price that the furniture in question would have commanded on the open market on the date of destruction. Replacement value, in contrast, refers to the amount of money necessary to replace the furnitur e. Replacement value exceeds market value by an amount equal to the depreciation attributable to the furnitur e. Depreciation represents a decrease in the value of the victims' furniture due to use and reflects the fact that the victims' furniture was no longer new when destroyed. Pursuant to the victims' homeowners insurance policy, their insurance company, Lloyd's of London, compensated the victims for the market value of their destr oyed furniture. The District Court, in opting for the replacement value, ordered Simmonds to pay r estitution to Lloyd's of London in an amount equal to the market value of the furniture and to pay restitution to the victims in an amount equal to the depreciation attributable to their furniture. The sum of these two amounts, the market value of the furniture and the depreciation attributable to the furniture, is equal to the replacement value of the fur niture. Simmonds argues that by including the depr eciation attributable to the furniture in its r estitution order, the District Court exceeded its statutory authority to order 6 restitution in an amount equal to the value of the property on the date of . . . destruction. 18 U.S.C. S 3663A(b)(1)(B)(i)(I). We must, ther efore, determine whether the District Court's decision to order r estitution in an amount equal to the replacement value, rather than equal to the market value, of the destroyed furniture was proper under S 3663A. This question is one of first impression in the Third Circuit. In arguing that the District Court's restitution order was proper, the gover nment relies primarily on the legislative history of the MVRA and the Victim Witness Protection Act (the VPWA), 18 U.S.C. S 3663(b)(1), as well as case law interpreting the language of the VPWA,2 all of which indicate that the purpose of both the VPW A and the MVRA is, to the extent possible, to make victims whole, to fully compensate victims for their losses, and to r estore victims to their original state of well-being. See, e.g., United States v. Kress, 944 F.2d 155, 159-60 (3d Cir. 1991); S. Rep. No. 104-179, at 12-13, 17-22 (1996) r eprinted in 1996 U.S.C.C.A.N. 924, 925-26, 930-35. Thus, when viewed solely against the backdrop of congressional intent as set forth in the relevant legislative history, the District Court's restitution order with respect to the victims' furniture appears to be appropriate. This Court, however , has interpreted more narrowly these br oad statements of congressional intent: [T]here is no doubt that the VWPA does not necessarily authorize a sentencing court to order r estitution in an amount that represents a victim's entir e loss. See Hughey v. United States, 495 U.S. 411, 413 (1990). Congress simply did not write the VWPA to fully satisfy the more ambitious purpose expressed in the legislative reports upon which [the government] relies. The plain and unambiguous language of S 3663(b)(1) clearly limits the amount of restitution to the value of the lost property. _________________________________________________________________ 2. The language of S 3663(b)(1) (the VWP A) and S 3663A(b)(1) (the relevant portion of the MVRA) is identical in all relevant respects. Therefore, absent unique and highly persuasive MVRA legislative history, of which there is none, Third Circuit cases interpreting the language of the S 3663(b)(1) control in this case. 7 Government of the Virgin Islands v. Davis, 43 F.3d 41, 46 (3d Cir. 1994). Thus, we cannot simply defer to the sweeping language in the MVRA's legislative history in deciding whether the District Court exceeded its statutory authority by ordering restitution in an amount equal to the replacement value of the victims' fur niture. Looking, however, at the plain language ofS 3663A, it states that a district court judge must awar d restitution to victims in an amount equal to the value of the property on the date of the damage, loss, or destruction. 18 U.S.C. S 3663A(b)(1)(B)(i)(I). While the statute does not expressly define value as replacement value, neither does it define value as market value. In fact, the statute is silent as to which of these two measures should be used to determine the value of the victims' furniture. Ultimately, we are presented with a statute (the primary and overarching goal of which is to make victims of crime whole, to fully compensate these victims for their losses and to r estore these victims to their original state of well-being) that expressly directs the sentencing judge to award restitution in an amount equal to the value of the pr operty on the date of the damage, loss, or destruction. Although we have yet to decide whether the ter m value as used in S 3663A contemplates a restitution order based on replacement value rather than fair market value, the Eleventh Circuit recently addressed this very question, concluding that value in S 3663A contemplates a restitution order based on replacement cost where actual cash value is unavailable or unreliable. See Shugart, 176 F.3d at 1375. Moreover, the court in Shugart concluded that, in some situations, replacement value is an appropriate measure of value underS 3663A. Id. The Shugart court, in attempting to deter mine the appropriate measure of value underS 3663A(b)(1) for a church burned down by the two defendants, reasoned that: Section 3663A(b)(1) requires the defendants to pay restitution in an amount equal to the value of the Church on the day they burned it down. For fungible commodities, value is easy to determine: it's the actual cash value, or fair market value, of the item--that is, 8 [t]he fair or reasonable cash price for which the property could be sold in the market in the or dinary course of business. BLACK'S LAW DICTIONARY 35 (6th ed. 1990). According to the defendants, S 3663A always limits restitution to actual cash value. . . . We disagree. Although fair market value will often be an accurate measure of the value of property, it will not always be so. Where actual cash value is difficult to ascertain-- because an item is unique, or because there is not a broad and active market for it--replacement cost may be a better measure of value. Id. While there is no indication that the destroyed furniture in this case was unique, furnitur e often has a personal value to its owners that cannot be captured or accurately estimated by simply determining the market value of the furniture. Replacing the armchair one sits upon each evening or the bed one sleeps in each night with fur niture that others have already used may be difficult to accept. This would be necessary, however, if the household furniture is replaced at its market value because damaged furniture cannot be replaced at market value with equivalent new items. For that reason, when evaluating personal items of furniture in one's r esidence, we find that replacement value may be an appropriate measure of value under S 3663A(b)(1). In these circumstances, the market value or cash value is an inadequate or inferior measure of value. This interpretation of value, as the term is used in S 3663A(b)(1), is not only consistent with the Shugart court's reasoning and with the clear legislative intent behind the MVRA, but also with the U.S. Sentencing Guidelines and with other cases addressing the issues of restitution and loss valuation where value is difficult to ascertain.3 Moreover , this interpretation of value is _________________________________________________________________ 3. See United States v. Sharp, 927 F .2d 170, 173 (4th Cir. 1991) (holding that the replacement cost of a ventilation fan destroyed when two defendants bombed a mine was properly awar ded as restitution to victims of the bombing under 18 U.S.C. S 3663(b)(1)); cf. United States v. Akbani, 151 F.3d 774, 779-80 (8th Cir. 1998) ([I]n cases that result in 9 consistent with 18 U.S.C. S 3664, the statutory provision immediately following S 3663A, which per mits a sentencing court to order in-kind restitutionin the form of replacement of property. 18 U.S.C. S 3664(f)(4)(B) (emphasis added). We hold, therefor e, that the District Court properly considered replacement value as a measure of restitution and that it did not abuse its discretion under the circumstances of this case in then choosing it as the applicable measure in its award. We conclude by noting that the rule of lenity is inapplicable in this case. As the Shugart court stated: We only invoke the rule of lenity when, after considering the structure and purpose of a criminal statute, we are left with nothing more than a guess as to what Congress intended. See United States v. Wells, 519 U.S. 482, 498-99 (1997). In this case, we see no grievous ambiguity sufficient to r equire application of the rule of lenity. Chapman v. United States, 500 U.S. 453, 463 (1991) (quoting Huddleston v. United States, 415 U.S. 814, 831 (1974)). Shugart, 176 F.3d at 1376. Similarly, in the present case, we are not left with nothing more than a guess as to what _________________________________________________________________ damage to or loss or destruction of property, .. . [t]he language of the Victim and Witness Protection Act(VWPA) . . . restricts restitution . . . to the replacement value of the property. (citing 18 U.S.C. S 3663(b)(1)); United States v. Pemberton, 904 F.2d 515, 516-17 (9th Cir. 1990) (Being unique, the drawings were not fungible items for which there was a broad and active market; [i]n the absence of such a market, which would have supplied a readily ascertainable price, the court acted reasonably in relying upon the contract between Comstock's employer and the developer, the only parties with an immediate interest in the drawings, as an indication of value.); U.S. Sentencing Guidelines Manual S 2B1.1, application note 2 (1990) (Where the market value is difficult to ascertain or inadequate to measure harm to the victim, the court may measure loss in some other way, such as r easonable replacement cost to the victim.); U.S. Sentencing Guidelines ManualS 2Q2.1, application note 4 (1995) (Where the fair-market retail price is difficult to ascertain, the court may make a reasonable estimate using any reliable information, such as the reasonable r eplacement or restitution cost or the acquisition and preservation (e.g., taxider my) cost.). 10 Congress intended. Both the statutory language and the legislative history of the VWPA and the MVRA clearly indicate Congress's intent to make victims of crime whole, to fully compensate these victims for their losses, and to restore these victims to their original state of well-being. In light of the clear, overarching goal ofS 3663A, there is not only no grievous ambiguity with respect to Congress's intent, there is also no reason to conclude that the District Court abused its discretion here by opting for the replacement value of the victims' furniture rather than the market value. 2. The Clean Renewal Discount andNo Claim Discount Having concluded that the District Court properly included the depreciation attributable to the victims' furniture in its restitution or der, we must now determine whether the District Court erred by including in its restitution order the amount of the victims' lost clean renewal discount and no claim discount. Because the victims' lost insurance premium discounts do not constitute property that was damaged lost or destroyed by the criminal acts of Simmonds and his co-defendants, we will reverse the District Court's restitution order with respect to these amounts. The victims' clean renewal discount andno claim discount refer to the amount of money (in the form of lower home owners insurance premiums) that the victims would have saved had they not been forced tofile an insurance claim for the fire damage r esulting from the arson committed by Simmonds and his co-defendants. In arguing that the District Court erred in ordering restitution for the value of the victims' lost insurance pr emium discounts, Simmonds contends that the plain language of the controlling statute, 18 U.S.C. S 3663A(b)(1), allows the District Court to award restitution only in an amount representing the value of property lost or destroyed as a result of the defendant's criminal activity. Simmonds further contends that neither the victims' clean renewal discount nor their no claim discount is property that was lost, damaged or destroyed as a result of Simmonds' crimes. 11 As we have previously interpreted the ter m property in S 3663A(b)(1), it does not include consequential damages. See Government of the Virgin Islands v. Davis, 43 F.3d 41 (3d Cir. 1994). In Davis, the defendant, who pled guilty in federal district court to charges of conspiracy to commit fraud, forgery, and perjury, argued on appeal that the district court improperly ordered as restitution the amount of legal fees incurred by the victim to r ecover property fraudulently obtained by the defendant. In r eviewing the district court's restitution order , the Davis Court, highlighting the controlling statutory language, concluded that S 3663(b)(1) expressly limits r estitution to the value of the property that was damaged, lost or destr oyed during or as a direct result of the criminal acts in question. Relying on opinions from the Fourth, Fifth, Seventh, Ninth and Tenth Circuits holding that r estitution under the VWPA cannot include consequential damages,4 the Davis Court held that consequential damages, such as attor neys' fees, are not recoverable in restitution under S 3663(b)(1). Davis, 43 F.3d at 46. Consistent with our holding in Davis, we conclude that the District Court erred by including the value of the victims' clean renewal discount andno claim discount in its restitution order. The victims' lost insurance premium discounts are unquestionably a result of the defendant's criminal conduct. However, under S 3663A as we have interpreted it, the victims' lost insurance pr emium discounts are consequential damages and do not in any way constitute or represent the value of the property lost, damaged or destroyed as a result of Simmonds's crimes. The District Court exceeded its statutory authorization in ordering restitution for the victims' lostclean renewal discount and no claim discount, and we will, therefore, reverse the District Court's grant of r estitution with respect to these items. _________________________________________________________________ 4. See United States v. Mullins, 971 F .2d 1138, 1147 (4th Cir.1992); United States v. Arvanitis, 902 F.2d 489, 497 (7th Cir.1990); United States v. Barany, 884 F.2d 1255, 1261 (9th Cir. 1989); United States v. Patty, 992 F.2d 1045, 1049 (10th Cir .1993); United States v. Mitchell, 876 F.2d 1178, 1184 (5th Cir.1989). 12