Criminal Restitution and Civil Judgement for the Same Conduct: Can Two Wrongs Make a Right?

Trial Bar News – Jeremy K. Robinson

This month I wanted to discuss an interesting issue that may arise when a plaintiff is pursuing a case against a defendant who already has been criminally prosecuted for the harm that forms the predicate for the civil action.  As most attorneys having a passing familiarity with the criminal justice system know, oftentimes the court in a criminal proceeding will enter an award of restitution against the defendant pursuant to Penal Code § 1202.4 (a legislative byproduct of Proposition 8, also known as the “Victim’s Bill of Rights”).  So what happens if the victim in the criminal proceeding (or, in this case, an assignee of the victim’s rights) files a civil case against the same defendant for the harm already addressed in the restitution order?

This interplay was discussed by Division Three of the Second Appellate District in Vigilant Ins. Co. v. Chiu (2009) 175 Cal.App.4th 438.  In that case, the appellant, Robert Chiu sought the reversal of a judgment entered at the trial court level against him and in favor of Vigilant Insurance Company.  The underlying civil case followed Chiu’s conviction for grand theft for having stolen nearly $400,000 worth of computer accessories from his employer, ViewSonic.  As a part of his criminal sentence, Chiu was ordered to pay ViewSonic $615,000 in restitution, which included the value of the stolen property, as well as lost profits and opportunity costs, and pre‑order interest.  The restitution order was entered pursuant to Penal Code § 1202.4(f).

Vigilant was ViewSonic’s insurer for the period of time covering Chiu’s theft.  Pursuant to the terms of its policy with Viewsonic, Vigilant paid $347,085.31 (minus a $50,000 deductible) to ViewSonic.  In consideration for the payment, ViewSonic executed a release and assignment of all of its rights against Chiu to Vigilant.  Vigilant then filed a civil action against Chiu to recover the $347,085.31, plus the insured’s deductible of $50,000.  After a bench trial, the court awarded judgment in favor of Vigilant totaling $504,306.89 which consisted of $397,085.31 in actual damages, interest of $105,853.15 and costs in the amount of $1,368.43.

Chiu appealed the judgment, arguing that it was improper because (1) Vigilant, as the assignee of its insured, already had an enforceable judgment against Robert and was not entitled to a second duplicative judgment; (2) as a matter of law, there cannot be two civil judgments for the same injury; and (3) the trial court erred in excluding expert testimony as to the legislative purpose and intent behind Section 1202.4 and its provisions for restitution.  The appellate court rejected each of the arguments affirmed the judgment.

The court framed the issue as, “Does an order of restitution under Section 1202.4 in favor of a victim of a crime preclude the victim (or the victim’s assignee) from pursuing a separate civil action based on the same facts from which the criminal conviction arose?”  Vigilant Ins. Co. v. Chiu, supra, at pp. 442-443.  The court concluded it does not.  Id. at 443.

Proposition 8, entiled the “Victim’s Bill of Rights,” was passed by the voters on June 8, 1982.  The proposition added article I, section 28, subdivision (b) to the California Constitution, which declared that “all persons who suffer losses as a result of criminal activity shall have the right to seek and secure restitution from the persons convicted of the crimes causing the losses they suffer.”  Article I, section 28, subdivision (b) required the Legislature to enact these rights within one calendar year; Section 1202.4 was one of many statutes passed in response.

Section 1202.4 proclaims:  “It is the intent of the Legislature that a victim of crime who incurs any economic loss as a result of the commission of a crime shall receive restitution directly from any defendant convicted of that crime.”  This includes restitution for the economic losses suffered by their victims as well as a fine payable to the state Restitution Fund.  Full restitution for the victim’s economic loss is required, unless the court finds “compelling and extraordinary reasons for not doing so.”  Penal Code § 1202.4, subd. (f).

In 1996, language was added to section 1202.4 stating that “A restitution order imposed pursuant to subdivision (f) shall be enforceable as if the order were a civil judgment.”  The stated purpose of this addition was to better enable crime victims to collect restitution.

In analyzing the Legislative intent behind section 1202.4, the court in Chiu determined that the various provisions of that section, read together, demonstrate legislative recognition of the distinct and separate right of a victim to pursue a civil remedy irrespective of the restitution order.  Vigilant Ins. Co. v. Chiu, supra, at pp. 443-444.  The court indicated that while a restitution order is enforceable as if it were a civil judgment (see, Pen.Code, § 1202.4, subd. (i)), it is not a civil judgment.  Vigilant Ins. Co. v. Chiu, supra, at p. 444.  A restitution order does not resolve civil liability.  Id. at 445, citing People v. Whisenand (1995) 37 Cal.App.4th 1383, 1391.

Although Section 1202.4 is partly based on the right of victim compensation, the Chiu court reasoned, other courts have indicated that restitution also serves the state’s interest in rehabilitation and punishment.  See, e.g., People v. Moser (1996) 50 Cal.App.4th 130, 135.  Among other salutary purposes, it acts as a “deterrent to future criminality” by forcing criminals to directly face the harm they have caused to their victims.  Id. at 134.  “The direct relation between the harm and the punishment gives restitution a more precise deterrent effect than a traditional fine.”  Id. at 135‑136.

Additionally, a restitution order reimburses only for economic losses, not noneconomic losses.  Penal Code § 1202.4, subd. (f)(3).  Thus, while there is certainly some overlap in the sums recoverable via restitution and a civil case, they are not entirely duplicative.

As such, for example, other courts have held that a waiver and release signed by the victim in a civil action will not extinguish the victim’s ability to obtain restitution:

While a settlement agreement with, and release of, a defendant’s insurance company may reflect a victim’s willingness to accept the amount paid in full satisfaction for all civil liability, it does not reflect the willingness of the People to accept that sum in satisfaction of the defendant’s rehabilitative and deterrent debt to society. A restitution order pursuant to a defendant’s plea is an agreement between the defendant and the state.  (Citation)  The victim is not party to the agreement, and a release by the victim cannot act to release a defendant from his financial debt to the state any more than it could terminate his prison sentence.  People v. Bernal (2002) 101 Cal.App.4th 155, 162.

Chiu argued that this arrangement is fundamentally unfair because it allows for the plaintiff to recover the same sums of money twice, but the court rejected that claim as incorrect.  On the contrary, to the extent there is any duplication between amounts ordered for restitution and any sums recovered by way of a verdict or settlement in subsequent civil litigation, subdivision (j) of section 1202.4, provides a set-off for those amounts.  That section provides in pertinent part: “… Restitution collected pursuant to this subdivision shall be credited to any other judgments for the same losses obtained against the defendant arising out of the crime for which the defendant was convicted.”  This prevents the possibility of double recovery by way of the two separate actions.  See People v. Short (2008) 160 Cal.App.4th 899, 903.

As such, the court in Chiu held that while Chiu is obligated to reimburse Vigilant for the total amount of his theft, any amount paid to Vigilant pursuant to the civil judgment will be credited against the restitution order and vice versa.  Therefore, the court found unpersuasive Chiu’s argument that the civil judgment was redundant and would permit duplicative recovery, and allowed Vigilant’s civil judgment against Chiu to stand.

Just as a practical footnote here, if you ever find yourself discussing a possible civil case with a potential client who was victimized in a crime, I encourage you to make sure the client pursues the criminal restitution avenue as well as any tenable civil remedies.  Particularly in cases where civil litigation may prove unavailing because of cost problems, liability issues, judgment-proof defendants, or any other of a number of factors, the restitution mechanism will provide the injured party with a means to recover at least some of the damages suffered.