Court Opinion

ID: 4156409
Source: CourtListenerOpinion
Date Created: 2017-03-29 17:00:26.199792+00
Date Added: 2024-06-11T07:46:39.121835
License: Public Domain

NOT PRECEDENTIAL

      UNITED STATES COURT OF APPEALS
           FOR THE THIRD CIRCUIT
                _____________

                    No. 15-2343
                   _____________

          UNITED STATES OF AMERICA

                          v.

          ANTHONY DWAYNE BAXTER,
                           Appellant

                   _____________

                    No. 15-2477
                   _____________

          UNITED STATES OF AMERICA

                          v.

          ANTHONY DWAYNE BAXTER,
             a/k/a Tony Allen Baxter
             a/k/a Anthony B. Allen
             a/k/a Anthony E. Baxter

                   Anthony D. Baxter,
                                   Appellant
                   _____________

    On Appeal from the United States District Court
        for the Eastern District of Pennsylvania
(E.D. Pa. Nos. 2-11-cr-00681-001 & 2-11-cr-00733-001)
     District Judge: Honorable Timothy J. Savage
                   ______________

     Submitted Under Third Circuit L.A.R. 34.1(a)
                 October 27, 2016
                 ______________
             Before: FISHER,* VANASKIE and KRAUSE, Circuit Judges

                                 (Filed: March 29, 2017)

                                       ___________

                                        OPINION
                                       ___________

VANASKIE, Circuit Judge.

       Anthony Dwayne Baxter appeals denial of his motion filed under 28 U.S.C.

§ 2255 challenging his 71-month prison term imposed following his plea of guilty to

charges of mail fraud in violation of 18 U.S.C. § 1341, wire fraud in violation of 18

U.S.C. § 1343, loan fraud in violation of 18 U.S.C. § 1014, bankruptcy fraud in violation

of 18 U.S.C. §§ 152(1) and 152(3), passport fraud in violation of 18 U.S.C. § 1542, and

misuse of a social security number in violation of 42 U.S.C. § 408(a)(7)(B). We granted

a certificate of appealability on a single issue: whether Baxter’s sentencing counsel was

ineffective for arguing that an internet company’s valuation of real estate should be used

for purposes of making the “loss” calculation on one of the fraud charges under U.S.S.G.

§ 2B1.1. We conclude that under the circumstances presented here, counsel’s use of the

valuation did not constitute ineffective assistance. Accordingly, we will affirm the

District Court’s denial of the § 2255 motion.

                                             I.

       *
       Honorable D. Michael Fisher, United States Circuit Judge for the Third Circuit,
assumed senior status on February 1, 2017.
       
         This disposition is not an opinion of the full Court and pursuant to I.O.P. 5.7
does not constitute binding precedent.
                                             2
       In 2011, two separate indictments were returned against Baxter, charging him with

multiple counts of fraud. On May 17, 2012, Baxter pleaded guilty without a plea

agreement to all charges in both indictments. The indictments were consolidated for

purposes of sentencing, which occurred on January 3, 2013.

       In accordance with U.S.S.G. § 3D1.2, the counts from both indictments were

grouped together to determine the applicable advisory range of punishment. Critical to

the ascertainment of Baxter’s advisory sentencing guideline range was the aggregate

amount of loss sustained as a result of his frauds. Pertinent to the matter before us is the

calculation of loss on one of Baxter's fraud charges arising from a mortgage Baxter

procured for a residential property in Williamstown, New Jersey.

       The Application Notes to the applicable section of the United States Sentencing

Guidelines Manual – § 2B1.1 – essentially prescribe that the loss attributable to the

Williamstown fraud be measured by the difference between the amount paid by the

lender and the fair market value of the property at the time that the defendant’s guilt was

established. See U.S.S.G. § 2B1.1, cmt. n.3(E)(iii) (2012).1

       1
           Application Note 3(E)(iii) to U.S.S.G. § 2B1.1., in pertinent part, provides:

       [I]n the case of a fraud involving a mortgage loan, if the collateral has not
       been disposed of by the time of sentencing, use the fair market value of the
       collateral as of the date on which the guilt of the defendant has been
       established, whether by guilty plea, trial, or plea of nolo contendere.

       In such a case, there shall be a rebuttable presumption that the most recent
       tax assessment value of the collateral is a reasonable estimate of the fair
       market value. In determining whether the most recent tax assessment value
       is a reasonable estimate of the fair market value, the court may consider,
       among other factors, the recency of the tax assessment and the extent to
                                               3
       The parties each submitted sentencing memoranda suggesting different fair market

values for the property. The Government calculated the loss relating to the Williamstown

property by subtracting a $341,000 estimate of the property’s fair market value provided

by Bank of America2 from the $398,153 payment the mortgage lender provided for the

purchase of the property. The Bank of America valuation netted a loss of $57,153.

Baxter’s sentencing memorandum proposed a slightly higher fair market valuation of

$344,100 reflecting an estimate provided by the website Zillow.3 The Government

agreed to use the Zillow valuation, and the District Court appears to have utilized it in

calculating the aggregate loss.4 The Zillow valuation resulted in a loss of $54,053

attributable to the mortgage fraud. When combined with the losses from Baxter’s other

fraudulent conduct, the aggregate loss for sentencing purposes totaled $137,260. At no

time during the sentencing did either side suggest using the most recent tax assessment

value (“TAV”) of the property for the purposes of calculating the loss related to the

Williamstown property.

       At sentencing, the District Court determined the aggregate loss to exceed

$120,000, but not $200,000. Under the Guidelines, Baxter’s total offense level was 18,

       which the jurisdiction's tax assessment practices reflect factors not relevant
       to fair market value.
       2
           Bank of America was the mortgage lender for the loan.
       3
        Zillow’s “Zestimate” home valuation tool uses a proprietary formula to estimate
the value of a particular property. The Zestimate utilizes public and user-submitted data,
including special features of the property, location, and market conditions.
       4
           The District Court did not make an explicit finding in this regard.

                                               4
which included a 10-level enhancement corresponding to the aggregate loss from all of

his frauds under U.S.S.G. § 2B1.1(b)(1)(F). Combined with Baxter’s criminal history

category of VI, this offense level yielded a suggested imprisonment range of 57 to 71

months. The Government moved for an additional upward variance, which was denied.

The District Court sentenced Baxter to an aggregate 71 months’ incarceration and three

years of supervised release.

       Rather than initiating a direct appeal, Baxter filed a motion pursuant to 28 U.S.C.

§ 2255 seeking to vacate, set aside, or correct his sentence. Baxter raised two broad

issues in his motion. First, Baxter alleged that his counsel was ineffective for failing to

directly appeal his sentence after Baxter instructed him to do so. Second, Baxter alleged

that his counsel was ineffective in connection with the District Court’s calculation of the

aggregate loss associated with his fraud charges. Relevant to this appeal, Baxter argued

that counsel should have argued that the District Court use the 2012 or 2013 TAV of the

Williamstown property for the purposes of calculating the loss to the mortgage lender.

Because the TAVs assigned a higher property value than the Zillow valuation, their use

would have reduced the aggregate loss attributable to the frauds to more than $70,000,

but not more than $120,000. The resultant impact on Baxter’s advisory imprisonment

range would have been to lower it to 46 to 57 months.

       The District Court conducted an evidentiary hearing on Baxter’s § 2255 motion.

Both Baxter and his sentencing counsel testified at the hearing. In an opinion dated

March 24, 2015, the District Court rejected Baxter’s claim that sentencing counsel was

                                              5
ineffective for not advocating that the 2012 or 2013 TAV be used to determine the

Williamstown property’s fair market value.

          Baxter appealed, requesting a certificate of appealability. We granted his request

on the issue of whether Baxter’s sentencing counsel was ineffective for arguing that the

Zillow valuation should be used in calculating the loss associated with Baxter’s loan

fraud charge instead of advocating that the District Court use the TAV of the property

from 2012 or 2013.

                                              II.

       The District Court had jurisdiction under 18 U.S.C. § 3231 and 28 U.S.C. § 2255.

We have jurisdiction under 28 U.S.C. §§ 1291 and 2253(a). “In a federal habeas corpus

proceeding, we exercise plenary review of the district court’s legal conclusions and apply

a clearly erroneous standard to the court’s factual findings.” United States v. Lilly, 536
F.3d 190, 195 (3d Cir. 2008) (citing Lambert v. Blackwell, 134 F.3d 506, 512 (3d Cir.

1997)).

                                              III.

       To prevail on his ineffective assistance of counsel claim, Baxter “must show that

counsel’s representation fell below an objective standard of reasonableness.” Strickland

v. Washington, 466 U.S. 668, 688 (1984). In evaluating counsel’s performance, “every

effort [must] be made to eliminate the distorting effects of hindsight, to reconstruct the

circumstances of counsel’s challenged conduct, and to evaluate the conduct from

counsel’s perspective at the time.” Bell v. Cone, 535 U.S. 685, 698 (2002) (quoting

Strickland, 466 U.S. at 689). Baxter “must overcome the ‘presumption that, under the

                                               6
circumstances, the challenged action might be considered sound . . . strategy.’” Id.

(quoting Strickland, 466 U.S. at 689 (internal quotation marks omitted)). This

presumption can be refuted by demonstrating that “(1) the suggested strategy (even if

sound) was not in fact motivating counsel, or (2) that the actions could never be

considered part of a sound strategy.” Thomas v. Varner, 428 F.3d 491, 499 (3d Cir.

2005).

         Baxter asserts that counsel incorrectly suggested that the District Court utilize the

Zillow valuation as the fair market value of the Williamstown property, and instead

should have insisted that the District Court use the property’s 2012 or 2013 TAV. The

value assigned to the property underlying Baxter’s loan fraud is significant because

§ 2B1.1 of the Guidelines specifies that a defendant’s “offense level is to be increased

based on the loss amount for offenses involving fraud.” United States v. Diallo, 710 F.3d
147, 150 (3d Cir. 2013). Where, as here, the fraud involves a mortgage loan and the

underlying property has not been sold, the loss amount is calculated by subtracting the

fair market value of the property “as of the date on which the guilt of the defendant has

been established” from the outstanding loan balance. U.S.S.G. § 2B1.1(b) cmt. n.3E(iii)

(2012). 5 The Guidelines specify “a rebuttable presumption that the most recent tax

assessment value of the collateral is a reasonable estimate of the fair market value.” Id.

To gauge whether a TAV is a reasonable estimate of value, a court “may consider, among

         “[S]entencing courts must apply the guidelines in effect at the time of
         5

sentencing.” United States v. Wood, 486 F.3d 781, 790 (3d Cir. 2007) (quoting United
States v Kopp, 951 F.2d 521, 526 (3d Cir. 1991)).

                                                7
other factors, the recency of the tax assessment and the extent to which the jurisdiction’s

tax assessment practices reflect factors not relevant to fair market value.” Id.

       When Baxter pleaded guilty to the mortgage fraud charge, the 2012 TAV of

$444,500 was the most recent assessment. Because the 2012 TAV exceeds the $398,153

mortgage loan, Baxter argues that there was no net loss associated with the property. If

the loan fraud resulted in no loss, the aggregate loss attributable to Baxter’s frauds would

be $83,207—a reduction that would have called for an 8-point enhancement under the

Guidelines instead of the 10-point enhancement Baxter received. See id.

       Alternatively, Baxter argues that if the Government attempted to rebut the

presumption that the 2012 TAV was a reasonable estimate of the fair market value,

counsel should have proffered the 2013 TAV of $381,700 as a more accurate reflection

of the property’s fair market value. The 2013 TAV was effective October 1, 2012—only

three months prior to Baxter’s January 3, 2013 sentencing. Using the $381,700 TAV

would result in a loss of $16,453 related to the property and an aggregate loss of $99,660

for sentencing purposes. The 2013 TAV would also lead to an 8-point enhancement

instead of the 10-point enhancement Baxter received.

       The question we face is whether the District Court erred in concluding that

counsel was not ineffective for suggesting the Zillow valuation and failing to bring the

TAVs to the District Court’s attention at sentencing. The District Court concluded that

the record evidences a “reasonable and professional” strategy by counsel to provide the

Zillow valuation to the District Court, and we agree. (App. at 11.) While counsel

admitted that he “take[s] Zillow values with a grain of salt,” and that he did not

                                             8
investigate the accuracy of the Zillow valuations, counsel explained that it was “certainly

a concern” that if the property were properly appraised, it would appraise for significantly

less than the Zillow valuation. (Supp. App. at 66, 68.) When asked if, from his

perspective, the Government’s use of the Zillow valuation was a “bit of a windfall for the

defense,” counsel replied that he “thought it was a favorable position that was not going

to require a tremendous amount of litigation to get to.” (Id. at 68.)

       Counsel’s testimony makes clear that he feared an appraisal of the property could

lead to an even lower value than the Government had initially proposed using. The 2012

TAV was outdated as it was based upon an estimate of the property’s value made in

2008. Furthermore, as the District Court observed, “[t]he property was vacant, unkempt

and subject to a foreclosure sale, all factors affecting its fair market value.” (App. at 11.)

If counsel had suggested that the District Court consider the 2012 or 2013 TAVs as the

value of the property, it is certainly plausible that the Government would have objected

and an appraisal would have been sought. It is also plausible that an appraisal would

have resulted in a lower valuation than the Zillow estimate. The Government represents

that TAVs “are based on factors such as lot size and the number of rooms in a house,”

and “fail completely to account for the actual condition of the property.” (Appellee Br. at

29.) Given this concern, counsel’s strategy was reasonable.

       Baxter did not offer any evidence to suggest that counsel was not actually

motivated by this strategy or that his actions could never be a part of a sound strategy.

Instead, Baxter argues that Zillow valuations are frowned upon by courts across the

country and are inherently unreliable. But Baxter ignores that the Zillow valuation was

                                              9
used by his counsel to secure a more favorable calculation of the loss associated with his

loan fraud. Despite Baxter’s argument to the contrary, counsel was not deficient for

using a potentially unreliable Zillow valuation to secure Baxter a more favorable loss

calculation than what the Government had proposed. The Zillow valuation was used to

Baxter’s benefit while at the same time avoiding counsel’s fear of a much lower

appraisal. Counsel’s representation was not ineffective because his performance was

based upon a strategic decision rooted in common sense.

                                            IV.

       For the foregoing reasons, we will affirm the District Court’s denial of Baxter’s

§ 2255 motion.

                                            10