Dmitry Gorin
Partner
Eisner Gorin LLP
Robert Hill
Associate
Eisner Gorin LLP
Alan Eisner
Partner
Eisner Gorin LLP
Whether in the context of an automobile accident involving a drunk or reckless driver, an assault, or a property crime such as vandalism, the same set of facts can often give rise to both a criminal prosecution and a civil action between the criminal defendant and the alleged victim. Often, the parties come to a civil settlement agreement outside of court before the criminal case is resolved. This presents a thorny set of issues around calculating criminal restitution about which both civil and criminal counsel must be prepared to advise their client. Our law firm has handled several contested restitution hearings after criminal sentencing, despite a civil settlement having been reached and fully funded beforehand.
Victim restitution in California state court is mandatory under Penal Code § 1202.4. The categories of losses compensable in criminal restitution are narrower than those available in, for example, a tort suit. The victim must be compensated for economic losses including property damage, lost wages, medical bills, legal bills, etc. Big ticket items which can be pursued in a civil suit, such as emotional distress damages or punitive damages, are not available in criminal restitution. The defendant can demand a hearing to determine the amount of restitution if a stipulation cannot be reached, but the burden of proof is much lower than that required to obtain a criminal conviction. The court's calculation of restitution need only be "reasonable," based on the evidence provided by the victim, typically through the prosecuting attorney.
The first major pitfall is assuming that a civil settlement that contains a general release will prevent a crime victim from recovering additional amounts in restitution. To the contrary, case law is clear that a civil release does not bind the criminal court. Ordering full victim restitution is a statutory command binding the court. Victim restitution is a state constitutional right. More fundamentally, neither the criminal court nor the prosecuting agency are parties to the civil settlement. No matter what the release purports to do in binding the victim from seeking further compensation, the prosecutor cannot be prohibited from informing the court about the full amount of restitution owed, and the court cannot be prohibited from ordering that the defendant pays it. Further, the victim can return to criminal court if additional medical or psychological care costs are incurred during probation.
All hope is not lost for the defendant, however, because a dollar-for-dollar offset against criminal restitution is available for payments already made pursuant to a civil settlement. This leads, however, to the second common pitfall. As noted, there are many categories of damages which may be encompassed in a civil settlement that are not available in criminal restitution. If the civil settlement is silent about exactly what is being compensated, then the defendant may face a finding that the civil settlement is not an offset against restitution. Importantly, the defendant is entitled to contest the medical bills and out-of-pocket costs the victim presents in a restitution hearing, calling his or her own experts about the true value of the civil settlement.
Consider a hypothetical. The drunk driver who caused a car accident enters a settlement with the victim motorist which provides only that the defendant will pay $20,000 to the victim as "full resolution of their dispute." In criminal court, the prosecutor presents evidence that the victim incurred $10,000 in medical bills which were not compensated by insurance. Some courts will find that the $20,000 settlement must have included the victim's medical bills. As the agreement was silent, however, the defendant may find himself in the uncomfortable position of being ordered to pay $10,000 in criminal restitution in addition to the $20,000 civil settlement which could very well have been compensation for emotional distress. In other words, the civil settlement agreement should be very clear and express, as to what is being covered.
Disputes further arise where the victim demands in a criminal restitution hearing the fees she paid to her civil lawyer, usually a contingent fee earned for obtaining the civil settlement. Reasonable attorney's fees, whether for obtaining a civil settlement or for representing the victim under Marsy's law in criminal court, are compensable under criminal restitution laws.
As an example, now the paid civil agreement is for $100,000, specifying that the entire settlement covers only out-of-pocket economic losses such as medical bills and that $100,000 is the total amount of the victim's losses. However, the settlement agreement includes another common provision that the parties will bear their own attorney's fees and costs. The victim's attorney takes a 20% contingency, or $20,000. Therefore, the victim effectively incurred $20,000 in attorney's fees and because the agreement specified that each side would bear its own fees, the defendant did not compensate the victim for those fees. The criminal court will calculate that the defendant received only $80,000 as an offset against the $100,000 restitution amount. Our unfortunate defendant now will effectively pay the victim $120,000; $100,000 in the original settlement plus the $20,000 in restitution not offset by the settlement.
Recall that the criminal court's calculation of restitution need only be reasonable. In an even more complex situation where the civil settlement provides for both economic and non-economic damages, the attorney representing the victim is charging his client to obtain both compensable and non-compensable amounts. Just as non-economic damages are unavailable in restitution, so too attorney's fees expended in obtaining non-economic damages are unavailable. But in the mixed damages situation, many courts will simply find that the time spent by the attorney is indivisible for all practical purposes as his efforts were directed at obtaining both categories of damages and simply order them reimbursed in full in restitution. As a practical reality, given the criminal context in which these questions arise, the courts may err on the side of fully compensating the victim.