State v. Matzdorff ( 2021 )

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UNDER ARIZONA RULE OF THE SUPREME COURT 111(c), THIS DECISION IS NOT PRECEDENTIAL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
STATE OF ARIZONA, Respondent,
v.
SHERRY LYNN MATZDORFF, Petitioner.
No. 1 CA-CR 21-0050 PRPC
FILED 9-23-2021
Petition for Review from the Superior Court in Mohave County
No. S8015CR201701015
The Honorable Derek C. Carlisle, Judge
REVIEW GRANTED; RELIEF DENIED
COUNSEL
Mohave County Attorney’s Office, Kingman
By Matthew J. Smith
Counsel for Respondent
Rideout Law PLLC, Lake Havasu City
By Bradlee H. Rideout, Wendy Marcus
Counsel for Petitioner
STATE v. MATZDORFF
Decision of the Court
MEMORANDUM DECISION
Presiding Judge Jennifer B. Campbell delivered the decision of the Court,
in which Judge Samuel A. Thumma and Chief Judge Kent E. Cattani joined.
C A M P B E L L, Judge:
¶1 Sherry Lynn Matzdorff petitions this court for review from
the superior court’s denial of her request for post-conviction relief, in which
she contested the court’s restitution order. For the reasons below, we grant
review but deny relief.
BACKGROUND
¶2 Matzdorff operated a home design and construction company
that went out of business before fulfilling all of its contractual obligations.
After investigating complaints by three clients that Matzdorff had taken
their money without performing contracted work, the State charged her
with three counts of forgery, three counts of theft, and one count of
fraudulent schemes and artifices.
¶3 Accepting an offer from the State, Matzdorff pled guilty to
three counts of theft and agreed to pay “restitution to [the three] victims on
all counts including [the] dismissed counts[.]” She admitted that when her
company began losing money, she misapplied the victims’ funds toward
employee and operating expenses, as well as other clients’ projects, in the
hope that when business improved “she would be able to get the
appropriate money back to the appropriate projects.” The superior court
placed Matzdorff on three years’ probation and conducted a restitution
hearing.
¶4 After considering testimony and other evidence presented at
the hearing, the superior court ordered Matzdorff to pay $281,044.84 in
restitution: (1) $186,140.69 to victims A.L. and S.L., (2) $45,381.08 to victim
R.Z., (3) $19,523.07 to victims J.T. and N.T., and (4) $30,000 to the Arizona
Registrar of Contractors (“ROC”). The award to the ROC was intended to
reimburse it for covering a portion of R.Z.’s loss.
¶5 Matzdorff petitioned the superior court for post-conviction
relief under Arizona Rules of Criminal Procedure (“Rule”) 33. She argued
the court had erroneously awarded restitution for the victims’
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“commission” and “overhead” payments to her—which accounted for
nearly one-half of the total restitution award. She also argued the court had
erroneously awarded restitution to the ROC. The court summarily
dismissed Matzdorff’s petition, and she timely sought our review of that
dismissal.
DISCUSSION
¶6 We consider the superior court’s summary denial of post-
conviction relief for an abuse of discretion. State v. Amaral, 239 Ariz. 217,
219, ¶ 9 (2016). The court abuses its discretion if it “makes an error of law
or fails to adequately investigate the facts necessary to support its decision.”
State v. Pandeli, 242 Ariz. 175, 180, ¶ 4 (2017). We review the court’s findings
of fact for clear error and its legal conclusions de novo. Id. at ¶¶ 3–4. We
will affirm its decision “if it legally is correct for any reason.” State v.
Roseberry, 237 Ariz. 507, 508, ¶ 7 (2015).
¶7 By statute, the superior court “shall require” a person
“convicted of an offense” to pay “restitution to the person who is the victim
of the crime . . . in the full amount of the economic loss as determined by
the court.” A.R.S. § 13-603(C). For purposes of A.R.S. § 13-603(C),
“‘economic loss’ means any loss incurred by a person as a result of the
commission of an offense,” but it “does not include losses incurred by the
convicted person, damages for pain and suffering, punitive damages or
consequential damages.” A.R.S. § 13-105(16). For these reasons, to be
recoverable, a “loss must be one that the victim would not have incurred
but for the criminal conduct” and must have been “directly cause[d]” by
the criminal conduct. State v. Madrid, 207 Ariz. 296, 298, ¶ 5 (App. 2004)
(citing State v. Wilkinson, 202 Ariz. 27, 29, ¶ 7 (2002)). “If the 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.” Wilkinson, 202 Ariz. at 29, ¶ 7.
Furthermore, because “[t]he purpose of restitution is to make the victim
whole, not to punish,” State v. Ellis, 172 Ariz. 549, 550 (App. 1992), a
restitution award “should not compensate victims for more than their
actual loss” and should be reduced by any benefits conferred to a victim by
the defendant. Town of Gilbert Prosecutor’s Office v. Downie, 218 Ariz. 466,
469, 472, ¶¶ 13, 26–27 (2008).
¶8 The State bears the burden of proving a victim’s entitlement
to restitution by a preponderance of the evidence. State v. Lewis, 222 Ariz.
321, 324, ¶ 7 (App. 2009). Our legislature has not “prescribe[d] the standard
to apply in calculating restitution,” Ellis, 172 Ariz. at 550–51, nor has it
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defined “the word ‘loss’ in the context of restitution,” Town of Gilbert, 218
Ariz. at 468, ¶ 10. , Given the lack of narrowly defined parameters, “[a]
court has wide discretion in setting restitution based on the facts of each
case.” Ellis, 172 Ariz. at 551. A restitution award will be upheld “if it bears
a reasonable relationship to the loss sustained.” State v. Dixon, 216 Ariz. 18,
21, ¶ 11 (App. 2007).
¶9 Matzdorff agreed to construct four houses for the three
victims in this case—two houses for victim R.Z. and one house each for
victims A.L./S.L. and J.T./N.T. At the restitution hearing, the superior
court considered evidence from the victims and Matzdorff about the
contract price for the work, payments made by the victims, the work
performed by Matzdorff, and what the victims did with each property after
Matzdorff stopped performing.
¶10 The superior court used two methods to calculate restitution.
For one of the four houses at issue, the court determined the recoverable
loss by calculating the difference between the contract price and the amount
the victim paid to complete construction. For the other three houses, the
court determined the victims’ recovery by calculating the amount each
victim paid to Matzdorff minus the value each victim received for those
payments.
¶11 Matzdorff does not challenge the methods used by the
superior court but argues it erroneously concluded that the victims’
payments of “commission” and “overhead” were recoverable losses. She
posits that those payments should not be included in the restitution award
because she “earned” them. The State disputes Matzdorff’s position,
arguing the court appropriately awarded restitution of “commission” and
“overhead” payments because Matzdorff obtained those funds from the
victims under false pretenses.
¶12 The record shows the following about the “commission”
payments. Matzdorff testified that each victim contractually agreed to pay
a “commission” that was apparently six percent of the contract price for the
victim’s construction project. According to Matzdorff, the commissions
were not based on any sale or acquisition of the victims’ lots or houses but
were simply “paid on the construction of the house” to the “real estate agent
on record.” Matzdorff was a real estate agent. She withdrew the entire
commission payment for each victim’s project out of the “first draw” of the
victim’s funds for that project. In support of her testimony that she was
entitled to the “commission” payments, Matzdorff pointed to a provision
in her contracts with the victims that stated, Magic Homes (Matzdorff’s
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company) “is represented by Broadway Realty . . . and may have agents
sitting the models and selling homes that are associated with this real estate
agency. Real [e]state [a]gents will be compensated by Magic Homes[] for
the sale of these homes.”
¶13 The superior court did not abuse its discretion by denying
Matzdorff’s post-conviction claim about the “commission” payments. The
record supports the court’s findings that Matzdorff was not contractually
entitled to the “commission” payments, her receipt of those funds was
attributable to her commission of theft or fraud, and the payments provided
no value to the victims.
¶14 Turning to the evidence of “overhead” payments, Matzdorff
testified that she obtained those payments by totaling her costs for
employees and operating expenses, dividing that “overhead” by the
number of “draws” for each client’s project, and then taking a portion of
the total “overhead” from each “draw.”
¶15 The superior court did not abuse its discretion by denying
Matzdorff’s post-conviction claim that the “overhead” payments should be
excluded from the restitution award. Matzdorff admitted that she
misappropriated the victims’ funds to pay expenses—including employee
and operating expenses—unrelated to the victims’ projects. In testifying
about how she calculated and applied the “overhead” payments, Matzdorff
did not specify how any particular “overhead” cost related or contributed
to a victim’s project. The court noted that when the evidence showed an
allocation of employee time to a specific project for one of the victims—such
as plan design or site supervision—the court credited those payments to
Matzdorff and did not include them in the restitution award. The record
supports the court’s findings that the “overhead” payments arose from
Matzdorff’s commission of theft or fraud and that they did not provide
benefit to the victims. Matzdorff’s argument on review that she
mischaracterized as “overhead” certain “general contractor” services does
not alter the analysis.
¶16 Matzdorff also contends the ROC was not entitled to
restitution. The claim does not withstand scrutiny. If a criminal defendant
causes economic loss to a victim who is wholly or partially reimbursed for
the loss by an insurer, victim compensation fund, or “any other entity,” the
superior court “shall order the defendant to pay the restitution to that
entity.” A.R.S. § 13-804(E). Matzdorff does not dispute that victim R.Z.
received $30,000 from the ROC’s Residential Contractors’ Recovery Fund
as compensation for a loss caused by Matzdorff. Contrary to her argument,
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there is no requirement that the ROC’s entitlement to restitution depends
on its participation in the restitution proceeding. The superior court
appropriately exercised its statutory authority to award restitution to the
ROC. Cf. State v. Leal, 248 Ariz. 1, 3–5, ¶¶ 10–11, 14 (App. 2019) (upholding
restitution award to non-victim payor of victim’s funeral expenses and
observing that the court may award restitution to a non-victim entity when
that entity reimburses a victim’s economic loss).
CONCLUSION
¶17 For all these reasons, we grant review and deny relief.
AMY M. WOOD • Clerk of the Court
FILED: AA
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