Court Opinion

ID: 4020740
Source: CourtListenerOpinion
Date Created: 2016-08-02 16:02:20.196036+00
Date Added: 2024-06-11T14:30:22.386605
License: Public Domain

NOTICE: NOT FOR OFFICIAL PUBLICATION.
  UNDER ARIZONA RULE OF THE SUPREME COURT 111(c), THIS DECISION IS NOT PRECEDENTIAL
                  AND MAY BE CITED ONLY AS AUTHORIZED BY RULE.

                                     IN THE
              ARIZONA COURT OF APPEALS
                                 DIVISION ONE

                                IN RE COREY K.

                              No. 1 CA-JV 16-0064
                                FILED 8-2-2016

            Appeal from the Superior Court in Yavapai County
                         No. P1300JV201400253
                 The Honorable Anna C. Young, Judge

         VACATED AND REMANDED WITH INSTRUCTIONS

                                    COUNSEL

Yavapai County Attorney’s Office, Prescott
By Amy C. Drew
Counsel for Appellee State of Arizona

Roberts & Carver, PLLC, Prescott
By Jerry Carver
Counsel for Appellee K.S. Excavation, L.L.C., et al.

Law Office of Florence M. Bruemmer, P.C., Anthem
By Florence M. Bruemmer
Counsel for Appellant
                             IN RE COREY K.
                            Decision of the Court

                      MEMORANDUM DECISION

Presiding Judge Patricia K. Norris delivered the decision of the Court, in
which Judge Patricia A. Orozco and Judge Peter B. Swann joined.

N O R R I S, Judge:

¶1             Corey K. appeals from the superior court’s restitution order
entered after he admitted to criminally damaging construction equipment
owned by the victim, an excavation company (“the Company”). See Ariz.
Rev. Stat. (“A.R.S.”) § 13-1602 (Supp. 2015).1 We reject Corey’s argument
that the court abused its discretion in ordering him to pay restitution for the
revenues the Company lost because of his criminal conduct. We agree with
Corey, however, that the court should not have ordered restitution for all
of the attorneys’ fees the Company incurred because Corey’s criminal
conduct did not directly cause the Company to incur all of the fees.
Accordingly, we vacate the restitution order and remand to the superior
court to re-determine the amount of attorneys’ fees the Company is entitled
to as restitution and re-enter the restitution order as instructed below.

¶2            On November 20, 2015, the superior court held a contested
restitution hearing. The owners of the Company, S.S. and K.S., testified
about the losses the Company had incurred when Corey and two other
juveniles criminally damaged its construction equipment, which included
an excavator, two backhoes, a compactor, a loader, and a dump truck.
Based on the evidence presented, the superior court found the Company
was entitled to $90,650.86 in restitution, which included a stipulated
amount of $10,356.86, $66,500 in lost revenue, and $13,794 for attorneys’
fees. The superior court divided the restitution among the juveniles,
ordering Corey to “pay partial restitution in the amount of $30,216.53.” The
court also ordered Corey and his parents to be jointly and severally
responsible for that amount.

¶3            Corey first argues the superior court abused its discretion by
including in the restitution order the $66,500 in revenue the Company lost
during the time it was unable to perform excavation work while its

              1Although    the Arizona Legislature amended certain statutes
cited in this decision after the date of the offenses, the revisions are
immaterial to the resolution of this appeal. Thus, we cite to the current
version of these statutes.

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                             IN RE COREY K.
                            Decision of the Court

equipment was being repaired. See In re William L., 211 Ariz. 236, 239, ¶ 10,
119 P.3d 1039, 1042 (App. 2005) (appellate court reviews restitution order
for abuse of discretion). We reject this argument; the State demonstrated
by a preponderance of the evidence that the Company was entitled to
restitution for these losses. See id. at 238, ¶ 6, 119 P.3d at 1041.

¶4              Under A.R.S. § 8-344(A) (2014), when “a juvenile is
adjudicated delinquent, the court . . . shall order the juvenile to make full or
partial restitution to the victim of the offense for which the juvenile was
adjudicated delinquent.” Restitution is appropriate for a victim’s losses
that, first, “are economic,” second, “would not have occurred but for the
juvenile’s delinquent conduct,” and third, “are directly caused by the
delinquent conduct (e.g. not consequential damages).” In re Andrew C., 215
Ariz. 366, 368, ¶ 9, 160 P.3d, 687, 689 (citing State v. Wilkinson, 202 Ariz. 27,
29, ¶ 7, 39 P.3d 1131, 1133 (2002)). The guiding principle is for restitution
to make the victim whole to the extent the law permits. Id. at 368, ¶ 11, 160
P.3d at 689.

¶5            At the restitution hearing, the State introduced into evidence
a spreadsheet prepared by the Company listing the construction equipment
Corey and the other two juveniles damaged. S.S. testified that when Corey
and the other two juveniles “vandalized” the Company’s machines, the
Company had been working for a local developer on a construction project
and had been charging the developer the Company’s standard hourly rate
for each machine. S.S. explained the Company had been operating each
machine for the developer “[f]ive days a week ten hours each day.” S.S.
further explained the Company had been unable to operate the machines
on the developer’s project while the machines were being repaired. Thus,
S.S. calculated the Company’s $66,500 in lost revenue by multiplying the
Company’s hourly rate for a particular machine times ten hours per day for
each day the machine was out of service for repairs and then totaling those
amounts.

¶6            K.S. testified the Company had used the equipment at least 50
hours per week on the project. He also testified the Company would often
use the equipment to “do work on Saturdays” on other jobs as well. K.S.
further explained that after the Company removed its equipment from the
jobsite for repairs, the project’s developer “had to hire . . . some other
equipment and some other people . . . to do the work” to meet project
deadlines. K.S. explained the Company lost “revenue on other jobs” when
he “had to turn [them] away because [he] did not have the equipment to go
do those jobs.” K.S. and S.S. also explained that during the time the
Company’s equipment was out of service, it continued to incur operating

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                             IN RE COREY K.
                            Decision of the Court

expenses for employee payroll,2 tractor loans, workers’ compensation
insurance, and equipment and liability insurance. Although the State did
not introduce into evidence any contracts between the Company and the
developer, or billing and payment records between the developer and the
Company, the foregoing testimony of S.S. and K.S. constituted credible,
adequate evidence of the revenues the Company lost that it would not have
lost but for Corey’s criminal conduct, and which were directly caused by
his conduct.

¶7              Corey nonetheless argues the superior court abused its
discretion in ordering restitution for the Company’s lost revenues because
the State failed to provide any “expense sheets to demonstrate net losses
(they would need to pay employees, taxes, etc. while the equipment was in
use).” Corey did not raise this argument in the superior court, however.
Accordingly, he has waived it and cannot raise it on appeal. See Cty. of La
Paz v. Yakima Compost Co., Inc., 224 Ariz. 590, 606, ¶ 49, 233 P.3d 1169, 1185
(App. 2010) (arguments not raised in trial court are waived on appeal); see
also In re Kory L., 194 Ariz. 215, 220, ¶ 16, 979 P.2d 543, 548 (App. 1999) (“The
right to contest restitution can be waived.”). Even assuming Corey did not
waive this argument, under the circumstances of this case, we would reject
it. Although the State did not present any written evidence of the
Company’s expenses, K.S. and S.S. testified about the Company’s operating
expenses. See supra ¶ 6. And, K.S. also testified the Company had to take
out a $100,000 loan to maintain “working capital” so it could stay in
business given the revenue losses it had experienced because of Corey’s
criminal conduct.

¶8             Corey next argues the superior court should not have ordered
restitution for the $13,794 in attorneys’ fees the Company incurred, because
he did not directly cause the Company to incur these fees and thus they
constituted consequential damages. After reviewing the record, we agree
with Corey that at least some of the fees incurred by the Company were not
directly caused by his criminal conduct and constituted consequential
damages, and should not have been included in the superior court’s
restitution order.

¶9           As discussed, see supra ¶ 4, a restitution award may not
include “consequential damages.” State v. Slover, 220 Ariz. 239, 242, ¶ 5, 204
P.3d 1088, 1091 (App. 2009) (quoting A.R.S. § 13-105(16) (Supp. 2015)).

              2K.S.explained he “searched for things for [his] employees to
do so they didn’t go off to somebody else” because he could not “afford to
lose [his] employees.”

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                             IN RE COREY K.
                            Decision of the Court

Consequential damages are those that do not flow directly from the
criminal conduct. State v. Sexton, 176 Ariz. 171, 172, 859 P.2d 794, 795 (App.
1993). Thus, if a victim’s “loss results from the concurrence of some causal
event other than the defendant’s criminal conduct, the loss is indirect and
consequential and cannot qualify for restitution under Arizona’s statutes.”
State v. Wilkinson, 202 Ariz. 27, 29, ¶ 7, 39 P.3d 1131, 1133 (2002).

¶10            Here, K.S. testified he hired an attorney, J.C., so he could
“understand all of the legal aspects” of the situation the Company found
itself in. J.C. testified at the restitution hearing and submitted a billing
statement, which the superior court admitted into evidence, that consisted
of 59 entries of time billed on the case; each entry briefly described the work
performed. After reviewing these entries, and based on the testimony, it
appears J.C.’s legal services fell into three general categories.

¶11            First, it appears J.C. worked with the Company and its owners
to help the Company recover restitution by, for example, helping them
demonstrate and document the losses the Company had experienced. The
fees for these services qualify as a loss recoverable as restitution and are
distinguishable from the fees we held were improperly included in
restitution in Slover. 220 Ariz. at 243, ¶ 8, 204 P.3d at 1092. In Slover, we
held that an attorney’s fees were “consequential rather than direct damages
arising from” the defendant’s crime, and thus not recoverable as restitution
when the attorney “had worked to assure that evidence was properly
preserved” for the prosecutor’s use in prosecuting the underlying crime. Id.
at 243, ¶¶ 7-8, 204 P.3d at 1092. Unlike the situation in Slover, here J.C. did
not assist in preserving evidence for use in prosecuting the underlying
criminal damage charge, but instead provided legal services to the
Company to help it prove its losses for purposes of restitution. Cf. State v.
Leteve, 237 Ariz. 516, 530-31, ¶ 59, 354 P.3d 393, 407-08 (2015) (assuming that
attorneys’ fees incurred by crime victims in enforcing their victims’ rights
is compensable in restitution, trial court did not abuse its discretion in
including such fees in restitution order).

¶12            Second, it appears J.C. evaluated a possible tort claim against
Corey, the other two juveniles, and their parents. These services are too
attenuated from Corey’s criminal conduct to be properly included as
restitution because the services were provided in anticipation of the
Company possibly bringing a separate legal action against the juveniles and
their parents. Although the Company would not have incurred these fees
but for Corey’s criminal offense, “but for” causation cannot support
restitution, otherwise it would extend to consequential damages. Wilkinson,
202 Ariz. at 29, ¶ 7, 39 P.3d at 1133. And, these fees “would not have

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                              IN RE COREY K.
                             Decision of the Court

occurred without the concurrence of a second causal event”—the
Company’s decision to consider a civil action against the juveniles and their
parents. Id. at 29, ¶ 10, 39 P.3d at 1133. The superior court should not have
included the fees for these services in its restitution order.

¶13              Third, it appears J.C. provided legal services to assist the
county attorney in pursuing restitution. Insofar as J.C. was providing legal
services to the county attorney, “it is clear the attorney’s representation of
the victim . . . consisted of tasks that were actually the state’s responsibility,”
and “those attorney fees were not incurred as a direct result of the offenses”
Corey committed. Slover, 220 Ariz. at 243, ¶ 9, 204 P.3d at 1092; see also State
v. Streck, 221 Ariz. 306, 308, ¶ 10, 211 P.3d 1290, 1292 (App. 2009) (restitution
inappropriate for expenses incurred by victim of stolen tractor in
investigating and locating the tractor because such tasks were State’s
responsibility, and private costs associated with those tasks were
consequential damages). When an attorney acts “in the role of an adjunct
prosecutor,” assisting the State with the prosecution, the fees for such work
do “not flow directly from the defendant’s criminal conduct but rather
[arise] from either the state’s inability to prosecute the case independently
and competently or the [victim’s] mistrust that it would do so.” Slover, 220
Ariz. at 243, ¶ 8, 204 P.3d at 1092. The superior court should not have
included the fees for these services in its restitution order.

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                            IN RE COREY K.
                           Decision of the Court

¶14           For the foregoing reasons, we affirm the superior court’s
decision to include the Company’s lost revenues in its restitution order.
Nevertheless, because the superior court included all of the Company’s
attorneys’ fees in the restitution order even though not all of the fees were
directly caused by Corey’s criminal conduct, we vacate the superior court’s
restitution order and remand to the superior court to re-determine the fees
for legal services directly caused by Corey’s criminal conduct. After re-
determining the legal fees which may be included in the restitution order,
the superior court shall re-enter the restitution order.3

                                    :AA

              3In supplemental briefing authorized by this court to address
whether the superior “court may subject Corey’s parents to joint and
several liability for the restitution above the liability limit established
pursuant to A.R.S. §§ 8-344(C) (2014), 12-661(B) (2016),” Corey argued, and
the State agreed, that the superior court exceeded its statutory authority
when it ordered Corey’s parents to be jointly and severally responsible for
restitution in an amount exceeding $10,000. Because we have vacated the
restitution order, we do not need to address the Company’s argument that
the superior court’s order is final and conclusive regarding Corey’s parents’
joint and several liability. On remand, the superior court shall enter an
order holding Corey’s parents jointly and severally liable for the restitution
it orders for Corey’s criminal offense not to exceed $10,000. See A.R.S. §§ 8-
344(C) and 12-661(B).

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