PEOPLE v. BRUCE

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Court of Appeal, First District, Division 5, California.

The PEOPLE of the State of California, Plaintiff and Respondent, v. David Charles BRUCE, Defendant and Appellant.

No. A063033.

Decided: May 04, 1994

Daniel E. Lungren, Atty. Gen., George Williamson, Chief Asst. Atty. Gen., Ronald A. Bass, Sr. Asst. Atty. Gen., Stan Helfman, Supervising Deputy Atty. Gen., Mark S. Howell, Supervising Deputy Atty. Gen., San Francisco, for plaintiff and respondent. James D. Rodseth, Mendocino, for defendant and appellant.

I. INTRODUCTION

In this case we hold that when denying probation, a sentencing court may not require the defendant to pay restitution to a victim's insurance company, as an “indirect” victim of the offense, for an amount the insurer paid the victim for personal property loss.

II. BACKGROUND

David Charles Bruce burglarized the residence of Michael Price and stole personal property and cash.   He pleaded no contest to burglary (Pen.Code, § 459), and the court imposed the lower term of two years imprisonment.   Upon his express waiver of a restitution hearing, the court ordered Bruce to pay victim restitution under Government Code section 13967, subdivision (c), consisting of $1,550.00 to Price for his cash loss and $4,271.43 to Price's insurer, State Farm Insurance Company, for the amount it paid Price for his personal property loss.   The court declined to impose any restitution fine pursuant to section 13967, subdivision (a).

III. DISCUSSION

Bruce contends the court lacked authority to require payment of restitution to State Farm.  Section 13967, subdivision (c), of the Government Code provides that where a “victim has suffered economic loss” as a result of criminal conduct, and the defendant is denied probation, the court shall order the defendant to pay restitution to the victim in lieu of imposing all or a portion of a restitution fine.   The question presented is whether State Farm was a “victim” within the meaning of the statute.

In 1989, a pair of decisions held that insurance companies were not “victims” within the meaning of section 13967, subdivision (c), and thus could not be made the recipients of victim restitution.  (People v. Williams (1989) 207 Cal.App.3d 1520, 1523, 255 Cal.Rptr. 778;  People v. Blankenship (1989) 213 Cal.App.3d 992, 999, 262 Cal.Rptr. 141.)  Williams relied on the various definitions of “victim” in section 13960, subdivision (a)—e.g., a person who sustained injury or death as a direct result of a crime 1 —none of which encompassed the insurers in those cases.   (People v. Williams, supra, 207 Cal.App.3d at p. 1523, 255 Cal.Rptr. 778.)   Williams also rejected the People's argument that the victim's insurer, Allstate Insurance, was the “functional equivalent” of a victim:  “This overlooks the contractual nature of Allstate's obligation to [the victim], who was entitled to compensation because of premiums she paid to her insurer.   That Allstate made good on its obligation does not make it the victim of a crime.”  (Ibid.)   Blankenship endorsed both of these rationales.  (People v. Blankenship, supra, 213 Cal.App.3d at pp. 999–1000, 262 Cal.Rptr. 141.)

In 1993, the reliance of Williams and Blankenship on Government Code section 13960 was undermined by a pair of California Supreme Court decisions, not involving insurance companies, which held that the definition of victim in section 13960 does not apply to section 13967, subdivision (c).  (People v. Broussard (1993) 5 Cal.4th 1067, 22 Cal.Rptr.2d 278, 856 P.2d 1134 [restitution to victims who suffered purely economic loss];  People v. Crow (1993) 6 Cal.4th 952, 959–960, 26 Cal.Rptr.2d 1, 864 P.2d 80 [restitution to government agency].)   In both of those cases, however, the recipients of restitution were “direct victims.”   The Supreme Court acknowledged in Crow that other cases, including Williams and Blankenship, have held that restitution may not be ordered for “indirect victims,” and the Court said, “We express no view on whether a defendant may be ordered to pay restitution to an indirect victim.”  (People v. Crow, supra, 6 Cal.4th at p. 958, fn. 4, 26 Cal.Rptr.2d 1, 864 P.2d 80.)

After Broussard but before Crow, the court in People v. Franco (1993) 19 Cal.App.4th 175, 183, 23 Cal.Rptr.2d 475, striking an award of restitution to a city for payment of workers' compensation benefits, reaffirmed the efficacy of Williams and Blankenship “aside from any reliance on the definitions contained in Government Code section 13960.”  Franco explained, “Nothing in the history of section 13967, subdivision (c), as discussed in Broussard, indicates the Legislature intended to make insurers whole, at least in situations in which the insurer was not a direct victim of the crime.”  (People v. Franco, supra, 19 Cal.App.4th at p. 184, 23 Cal.Rptr.2d 475.)

 Here, we confront the dichotomy presented by Crow and Franco and decide whether State Farm may be made the recipient of restitution as an indirect victim.   We conclude it may not.

In People v. Severns, ––– Cal.App.4th ––––, ––––, 30 Cal.Rptr.2d 297 filed simultaneously with the present opinion, we hold that where probation is granted, restitution is not payable to an indirect victim under Penal Code section 1203.04, subdivision (a)(1), requiring restitution to the victim “if the crime involved a victim,” but is payable to the Restitution Fund under section 1203.04, subdivision (a)(2), requiring such payment “if the crime did not involve a victim.”  Government Code section 13967, subdivision (c), was intended to function like Penal Code section 1203.04.   The latter was enacted in 1983 as part of a package of legislation implementing the state constitutional provision for victim restitution added by Proposition 8.  (Cal. Const., art. I, § 28, subd. (b).)  There was, however, an omission from the package:  it provided for restitution to a victim where probation was granted, but not where probation was denied.   Subdivision (c) of Government Code section 13967 was added in 1986 to “plug the gap” and mandate victim restitution where probation is denied.  (People v. Broussard, supra, 5 Cal.4th at pp. 1073–1075, 22 Cal.Rptr.2d 278, 856 P.2d 1134.)   Its purpose was to bring the statute in line with the provisions of Penal Code section 1203.04 for restitution where probation is granted.  (Dept. of Finance, analysis of Sen.Bill No. 2404 (1985–1986 Reg.Sess.) [stating bill would impose requirements of Penal Code section 1203.04 upon defendants who are denied probation].)   If Government Code section 13967, subdivision (c), was intended to function as a counterpart to Penal Code section 1203.04, which was not intended to provide for restitution to an indirect victim (People v. Severns, p. 297 – ––––, 30 Cal.Rptr.2d 297), it follows that the subsequent legislation was likewise not intended to provide for such restitution.   Whether probation is granted or denied, in the case of an indirect victim any restitution is to be paid to the Restitution Fund.

The People point to cases approving orders of restitution to a victim's insurance company as a condition of probation (People v. Foster (1993) 14 Cal.App.4th 939, 948–952, 18 Cal.Rptr.2d 1;  People v. Calhoun (1983) 145 Cal.App.3d 568, 572–573, 193 Cal.Rptr. 394;  People v. Alexander (1960) 182 Cal.App.2d 281, 292–293, 6 Cal.Rptr. 153), and argue it would be anomalous to permit such restitution in that situation but not where the defendant is sentenced to prison.   We also perceive the anomaly, but believe those cases were wrongly decided, for as we conclude in People v. Severns, p. 297 – ––––, 30 Cal.Rptr.2d 297, the history of Penal Code section 1203.04 indicates it was not intended to authorize probationer restitution to an indirect victim.

The People also argue that payment to the insurer is consistent with the rehabilitative and deterrent purposes of a restitution order.  (See People v. Crow, supra, 6 Cal.4th at p. 958, 26 Cal.Rptr.2d 1, 864 P.2d 80.)   Those purposes, however, may be served by ordering payment of a hefty restitution fine, commensurate with the amount of the insurer's payment, for deposit into the Restitution Fund pursuant to Government Code section 13967, subdivision (a)—which will result in a benefit to true victims of crime.

 Finally, the People contend Bruce waived any error by failing to object below to the restitution order.   Because we conclude the court lacked authority to order payment of restitution to State Farm—i.e., the error was jurisdictional—we find no waiver.   Jurisdictional error is not waived on appeal by failure to assert it below.  (People v. Zito (1992) 8 Cal.App.4th 736, 741–742, 10 Cal.Rptr.2d 491;  People v. Williams, supra, 207 Cal.App.3d at p. 1524, 255 Cal.Rptr. 778.)

 The appropriate remedy is to strike the order of restitution to State Farm but remand the cause for a restitution hearing to permit the court to consider imposing a restitution fine under Government Code section 13967, subdivision (a).   In People v. Blankenship, supra, 213 Cal.App.3d at page 1000, footnote 10, 262 Cal.Rptr. 141, the court opted against such remand upon striking an award of $3,792.87 to an insurer, explaining, “We believe it is judicially uneconomical to do so because of the further hearings this would necessitate and the small financial benefit to be gained, if any.”   In the present case, however, we suspect that on remand the court might well conclude it is appropriate to impose a restitution fine commensurate with the amount of State Farm's payment—at the sentencing hearing the court said it was withholding a restitution fine because of the “substantial” amount of victim restitution—and we do not consider $4,271.43 to be of small financial benefit to the Restitution Fund.2

IV. DISPOSITION

The order of restitution to State Farm is stricken, and the cause is remanded for a hearing to determine whether a restitution fine should be imposed under Government Code section 13967, subdivision (a).   In all other respects, the judgment is affirmed.

FOOTNOTES

1.   Government Code section 13960, subdivision (a)(1), currently defines “victim” as “a resident of the State of California, a member of the military stationed in California, or a family member living with a member of the military stationed in California who sustains injury or death as a direct result of a crime.”   Subdivision (a)(2) defines “derivative victim” as a California resident who “(A) At the time of the crime was the parent, sibling, spouse, or child [of] a victim,” “(B) At the time of the crime was living in the household of the victim or who had previously lived in the household of the victim for a period of not less than two year[s] in a relationship substantially similar to a relationship listed in subparagraph (A),” or “(C) Is another family member of the victim, including the victim's fiance, and witnessed the crime.”

2.   If the court requires payment to the Restitution Fund, we do not believe this would affect any subrogation rights the insurer has against Bruce, since the payment is a “fine” (Gov.Code, § 13967, subd. (a)) rather than compensation to the victim for the loss.

DONALD B. KING, Associate Justice.

PETERSON, P.J., and HANING, J., concur.