People v. Waterman CA4/3 ( 2014 )

Filed 6/24/14 P. v. Waterman CA4/3
NOT TO BE PUBLISHED IN OFFICIAL REPORTS
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IN THE COURT OF APPEAL OF THE STATE OF CALIFORNIA
FOURTH APPELLATE DISTRICT
DIVISION THREE
THE PEOPLE,
Plaintiff and Respondent, G049909
v. (Super. Ct. No. RIF10005797)
MARYBETH WATERMAN, OPINION
Defendant and Appellant.
Appeal from a judgment of the Superior Court of Riverside County, Gary
B. Tranbarger, Judge. Judgment affirmed.
Richard L. Fitzer, under appointment by the Court of Appeal, for Defendant
and Appellant.
Kamala D. Harris, Attorney General, Dane R. Gillette, Chief Assistant
Attorney General, Julie L. Garland, Assistant Attorney General, Charles C. Ragland and
Kimberley A. Donohue, Deputy Attorneys General, for Plaintiff and Respondent.
* * *
A jury convicted defendant Marybeth Waterman of three counts of grand
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theft (Pen. Code, § 487, subd. (a); counts 1, 3, and 5) and three counts of diversion of
construction funds (§ 484b; counts 2, 4, and 6). The jury found true the allegations
defendant took over $200,000 (§ 12022.6, subd. (a)(2)) as to counts 1, 2, 3, 4, and 6, and
over $65,000 (§ 12022.6, subd. (a)(1)) as to counts 2, 4, 5, and 6, and that she committed
multiple felonies involving the taking of over $500,000 (§ 186.11, subd. (a)(2)) as to all
counts. The court sentenced her to six years eight months in prison.
On appeal defendant contends the court violated her constitutional rights to
a fair trial and to present a defense when it excluded an expert’s opinion that her conduct
was legal based on generally accepted business practices in the interior design industry.
She also contends the prosecutor improperly commented in his closing argument on her
right not to testify. We disagree with both contentions and affirm the judgment.
FACTS
Defendant is an interior designer who owned an interior design company in
Rancho Mirage named Studio Waterman. In 2006, Studio Waterman had cash flow
problems. It lost its $250,000 line of credit and could not obtain a new line of credit from
any other bank. Defendant made decisions about which client purchase orders would be
fulfilled from the available funds.
By February or March of 2007, Studio Waterman had $700,000 to
$800,000 in unfunded liabilities and lacked sufficient funds to finish its current jobs. Its
accountant suggested defendant move to a less expensive office building, cut down staff,
or find new clients. Defendant refused.
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All statutory references are to the Penal Code.
2
The company’s financial condition worsened. Its accountant gave
defendant monthly reports on the company’s financial condition, including the
outstanding balances on clients’ accounts.
At this point, Studio Waterman had only three or four clients, including the
Pharrises (Gerald and Lynn), the Berlins (James and Madeline), and the Wiltzes (James
and Jane). Studio Waterman used much of the money paid by these clients to pay the
company’s operating expenses, to advance other clients’ projects, to pay defendant, or to
pay credit card charges for personal expenses, such as “high end women’s clothing and
accessories, payments to a plastic surgeon, hair salon and spa treatment charges,
entertainment, travel at very high end . . . first class hotels, limousines, and international
travel.” Between 2006 and 2009, Studio Waterman paid defendant around $640,000.
The Pharrisses
In 2006, the Pharrises hired defendant to provide interior design services
for a house they were building in Indian Wells. The contract required the Pharrises to
pay defendant (1) the wholesale cost of furniture and fixtures listed in letters of estimate,
and (2) a 35 percent markup as defendant’s design fee. Of this, the Pharrises were to pay
defendant an upfront deposit equal to 20 percent of the total amount of any letter of
estimate. Between June 2008 and July 2009, the Pharrises paid defendant almost $1.3
million. Defendant and one of her employees falsely claimed to have ordered all the
items for which the Pharrises had paid.
In August 2009, the Pharrises learned from their general contractor that
defendant had not ordered the cabinets for their house. The Pharrises tried to contact
defendant by cell phone, land line, and e-mail. About two weeks later, she finally
answered the phone. In a meeting on August 24, 2009, defendant told the Pharrises that
her business had started declining right when the Pharrises started making their major
payments to her, that she had commingled their payments with her company accounts,
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and that their money was gone and had been used to pay for other people’s furniture.
Defendant said she was out of money, she had let her staff go, and she was paying her
overhead with her clients’ money. Gerald Pharris accused defendant of committing fraud
and she agreed. She offered to give the Pharrises some money she had received from
other clients for her design fees, but Gerald Pharris refused to accept it. He reported
defendant to the authorities because he did not want defendant to do this to anyone else.
The total loss suffered by the Pharrises was about $1.1 million.
The Berlins
In 2006, the Berlins hired defendant to provide interior design services for a
New York City apartment they were renovating. Pursuant to a letter of estimate, they
paid defendant deposits for items she purportedly ordered for them at her wholesale cost,
as well as defendant’s design fee equal to a 35 percent markup. They also paid her travel
expenses.
In July 2009, a subcontractor informed the Berlins that progress on the
apartment had stalled because defendant failed to deliver all the wall paper the Berlins
had ordered. An employee of defendant e-mailed the Berlins that the wall paper would
be shipped out. In August 2009, defendant claimed to be on vacation and in a “no cell
zone,” and also that she had visited the apartment and it was not in a ready condition for
the wall paper.
On August 18, 2009, James Berlin e-mailed defendant that the Berlins
would proceed to take necessary action. The next day, defendant phoned him and
acknowledged she had not ordered all the items she had claimed to. She said “her
business had been bad and she had used the money for other things and that she was
hoping that the next project would provide money for this project, but there was no next
project.” The Berlins suffered a loss of around $600,000 to $650,000.
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The Wiltzes
In the spring of 2007, the Wiltzes hired defendant to provide interior design
services for a house they were building in Indian Wells. Pursuant to a letter of estimate,
the Wiltzes paid defendant deposits for items she purportedly ordered for them, as well as
her service charge equal to a 35 percent markup. In August 2009, defendant told them
she did not have the money to pay the balance owing to vendors for some items for which
the Wiltzes had already paid, and that they would need to pay the vendors directly.
Defendant said she had lost a line of credit and was having financial difficulties. The
Wiltzes suffered a loss of around $300,000.
Defense
A forensic accountant testified that Studio Waterman’s books and records
showed that some money was paid to defendant (or paid toward her credit card charges
for personal expenses) to repay her for around $780,000 in loans she had made to the
company in 2004 and 2005. The company repaid defendant in full for those loans by
May 31, 2008. Studio Waterman owes the Pharrises, the Berlins, and the Wiltzes about
$1.7 million.
Character witnesses opined that defendant is honest, trustworthy, and
honorable.
DISCUSSION
The Court Did Not Abuse Its Discretion by Excluding Certain Expert Testimony
Defendant contends the court abused its discretion by excluding evidence
she acted within acceptable industry norms and lacked the specific intent required for
grand theft. She argues the court thereby violated her due process right to a fair trial and
her right to present a defense.
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Prior to trial, the People moved for a court ruling that “[e]vidence relating
to the common practice in the interior design or construction industry is not relevant and
should not [be] admitted into evidence.” At a pretrial hearing, the court and counsel for
both parties placed on the record some issues they had discussed in chambers. The
prosecutor stated, “Then I believe we also discussed evidence relating to the defense
bringing in an expert in the interior design industry would not be admitted and not be
relevant as to the practices.” The court stated, “That’s overbroad. Generally speaking,
that is correct. But I didn’t exclude all possibility of someone experienced in the industry
giving the jury some useful information. What we discussed was whether or not that
person could at all give an expert opinion about the legality of certain activity, whether or
not it was legal or not legal, and that it is certainly going to become clear to the jury and
everyone in this trial that defense is not a defense, and if it’s simply being presented in
furtherance of that kind of defense it won’t be permitted.” The prosecutor replied,
“Okay,” thereby acknowledging he understood the court’s ruling.
The court did not abuse its discretion by excluding expert testimony on the
legality of defendant’s conduct. (People v. McDowell (2012) 54 Cal.4th 395, 426
[court’s decision on admissibility of expert testimony reviewed for abuse of discretion].)
Expert opinion on a question of law is inadmissible (Summers v. A.L. Gilbert Co. (1999)
69 Cal.App.4th 1155, 1178), as is expert opinion that “invades the province of the jury to
decide a case” and “‘“amounts to no more than an expression of his general belief as to
how the case should be decided . . . .”’” (Piscitelli v. Friedenberg (2001) 87 Cal.App.4th
953, 972; see also People v. Coffman and Marlow (2004) 34 Cal.4th 1, 82).
Defendant contends her trial counsel reasonably misunderstood the court’s
ruling. She asserts that, regardless of how the court’s order is “characterized,” “defense
counsel never called an industry expert to testify as to common industry accounting,
fulfillment and banking practices because he, like everyone other than [plaintiff],
reasonably understood the court’s ruling as prohibiting him from doing so.” But the
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court and the prosecutor understood the ruling. Apparently, only defense counsel was
confused. Defendant cites no support in the record (or any other support) for his
assertion that his misunderstanding of the court’s ruling was reasonable. Moreover,
defense counsel could have asked the court on the record to clarify its ruling. He failed to
do so.
Next, defendant complains that the court improperly limited defense
counsel’s cross-examination of prosecution witness George Kline, who was not an
expert, but rather an employee of Studio Waterman from the spring of 2008 to August
2009. During that time, Kline’s primary responsibility at Studio Waterman was “UPS,”
as well as “additional general office functions,” such as assisting other staff members and
filing.
On cross-examination, defense counsel elicited, with no objection from the
prosecutor, Kline’s testimony that he had worked in the design industry prior to his
employment at Studio Waterman, and that, based on his prior experience and knowledge
and what he observed at Studio Waterman, he did not believe he had committed any
criminal conduct or had assisted anyone else’s criminal conduct.
Shortly thereafter, the following colloquy ensued.
Q. [BY DEFENSE COUNSEL]: “The sense that one gets in listening to your testimony
about conversations and about interaction and then in these e-mails is a couple of things.
One, this is a legitimate business that is functioning, that is providing services to
numerous clients.
A. Yes.
Q. When you think about, you know, shams or Ponzi schemes or these grand sort of shell
companies, one thinks of a purported business that is providing no service.”
[The court properly sustained the prosecutor’s objection to this statement.]
Q. [BY DEFENSE COUNSEL]: “Was this that type of business?” The court called a
sidebar conference, after which defense counsel moved on to another line of questioning.
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On appeal defendant contends the court improperly excluded Kline’s
testimony “about whether Studio Waterman was a Ponzi scheme which provided no
actual service.” The court did not abuse its discretion by doing so. Defense counsel’s
question concerning shams, Ponzi schemes, and shell companies went to the legality of
defendant’s business. Furthermore, the testimony would have been cumulative. Kline
testified that the other employees of Studio Waterman included an architect, two graphic
artists, an office manager, project managers, an in-house bookkeeper, a
secretary/receptionist, and a computer specialist. His testimony concerning Studio
Waterman’s employees and its daily activities revealed the company provided actual
interior design services to various clients. For example, Kline testified that money was
spent on projects for other clients and that vendors (who had provided merchandise)
pressured Studio Waterman for payment. Moreover, the court granted defense counsel
very generous latitude in cross-examining Kline, even allowing Kline to testify he did not
believe any criminal conduct “was going on” at Studio Waterman.
Defendant’s second contention concerning Kline’s testimony is that the
court improperly precluded Kline from testifying about defendant’s “business intent
during the economic downturn.” The court did not abuse its discretion. Kline had no
personal knowledge of defendant’s intent. Furthermore, whether defendant had the
requisite intent for grand theft was a question for the jury.
Finally, defendant contends the court improperly precluded Kline from
testifying “about litigation against a former client that owed a great deal of money to
Studio Waterman.” But Kline was not familiar with the subject; defense counsel had to
educate him by saying (in the guise of a question), “Hitchcock was actually a litigation
matter that Studio Waterman had against a prior client that had not paid a whole lot of
money.” The court did not abuse its discretion when it sustained the prosecutor’s
relevance objection. Hitchcock’s debt to defendant was irrelevant to whether defendant
committed grand theft and diversion of construction funds against the Pharrises, the
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Berlins, and the Wiltzes. And since Kline was unfamiliar with the litigation, it is unclear
what he could have testified about it (other than to respond to defense counsel’s
educational question/statements).
In sum, the court did not abuse its discretion and did not violate defendant’s
constitutional rights to a fair trial and to present a defense. A state’s evidentiary rules
generally do not abridge an accused’s right to present a defense. (People v. Cunningham
(2001) 25 Cal.4th 926, 999; United States v. Scheffer (1998) 523 U.S. 303, 308.) Nor
does a court abuse its discretion by precluding defense counsel from cross-examining a
witness about cumulative evidence. (Cunningham, at p. 999.) There was no error.
The Prosecutor Did Not Improperly Comment on Defendant’s Failure to Testify
During closing argument, the prosecutor argued that defendant intended to
commit grand theft. He then immediately commented on defendant’s right not to testify:
“Let’s move to a few different categories in terms of how you evaluate evidence. First,
let’s start with the defendant’s right not to testify. Miss Waterman has a right not to
testify. You cannot hold that against her. In fact, you can’t even talk about it during your
deliberations. There’s a — and you can’t consider it for any reason. [¶] There’s a law
school professor one time that told me, you know, if you’ve got a right but you get
penalized when you exercise that right, well what good is the right? So she didn’t testify
in this case, and you can’t consider that — for any purpose.” The court overruled defense
counsel’s objection.
Outside the jury’s presence, defense counsel elaborated on his objection:
“I’m sure [the prosecutor’s] intent was not to educate the jury on why we have a right not
to testify, but rather to highlight the fact that there is a right not to testify and it was
invoked in this case. [¶] I was surprised by the comment . . . . I’ve never heard a
Government prosecutor previously comment on the theory behind no comment on the
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Fifth Amendment. And so I thought it was an appropriate Griffin objection.” The court
again overruled the objection.
On appeal defendant contends the prosecutor implied to the jury that her
“failure to testify was evidence that she had the specific intent to steal . . . .”
In Griffin v. California (1965) 380 U.S. 609, 611-615 (Griffin), “the United
States Supreme Court held that the privilege against self-incrimination of the Fifth
Amendment prohibits any comment on a defendant’s failure to testify at trial that invites
or allows the jury to infer guilt therefrom, whether in the form of an instruction by the
court or a remark by the prosecution.” (People v. Clair (1992) 2 Cal.4th 629, 662.) In
Griffin, the prosecutor “made much of” the defendant’s failure to testify, and argued that
the defendant would know details such as whether the victim looked “‘beat up’” when
they went down an alley together. (Griffin, at p. 610.) The prosecutor argued: “‘These
things he has not seen fit to take the stand and deny or explain.’” “‘And in the whole
world, if anybody would know, this defendant would know.’” “‘Essie Mae is dead, she
can’t tell you her side of the story. The defendant won’t.’” (Ibid.)
Similar blatant references to the defendant’s failure to testify appear in the
case law. They “include remarks that the defendant ‘has been very quiet’ during trial;
‘where is the outcry of innocence?’; ‘Ask the defendant to explain these things’; ‘What
other witnesses could the defendant’s case have put forward who were totally available to
you?’ spoken while the prosecutor gestured toward the defendant; ‘He could have taken
the stand and explained it to you’; ‘Only Mr. Harris [the victim] and this defendant were
present at those initial meetings and we have brought you the testimony of Mr. Harris’;
‘If there are reasons why innocent people do not testify before the court, I do not know
what they would be.’ ‘There is only one person that can tell you [what happened], and
that’s the defendant.’” (Gershman, Prosecutorial Misconduct (2d ed.) 11:12, fns.
omitted.)
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“Prosecutorial comment which draws attention to a defendant’s exercise of
his constitutional right not to testify, and which implies that the jury should draw
inferences against defendant because of his failure to testify, violates defendant’s
constitutional rights.” (People v. Murtishaw (1981) 29 Cal.3d 733, 757, superseded by
statute on another point as recognized in People v. Boyd (1985) 38 Cal.3d 762, 772-773.)
In People v. Carter (2005) 36 Cal.4th 1114, 1190, defense counsel, in
closing argument, acknowledged that the defendant did not testify, admonished the jurors
they could not “‘hold it against him’” or “‘consider any of it,’” and “hypothesized a
number of reasons why a defendant might elect not [to] testify.” (Id. at p. 1190.) Our
Supreme Court held there was no Griffin error because the remarks, considered in
context, showed “that counsel was not suggesting that the jury draw any sort of adverse
inference from defendant’s silence.” (Carter, at p. 1192.) The attorney’s admonishments
that the jury could not consider the defendant’s silence, or hold it against him,
“manifestly did not constitute the type of comments that Griffin declared invalid.” (Ibid.)
In People v. Bradley (2012) 208 Cal.App.4th 64, a prosecutor “stated
‘[t]here was no valid explanation given by the [defendant] as to why the public could not
see the actual credit card statements,’” which comment elicited a defense motion for a
mistrial on Griffin grounds. (Bradley, at p. 85.) The trial court denied the motion.
(Ibid.) The prosecutor then told the jury that the defendant had a constitutional right not
to testify and “the jury could not draw an inference from the fact that [he] did not testify
because he was ‘entitled to just sit in that chair on his constitutional right and not say
anything.’” (Ibid.) The prosecutor explained to the jurors that, when he previously
commented on the defendant’s failure to explain why the credit card statements were
private, the prosecutor had not been talking about the defendant’s choice not to testify.
(Id. at pp. 85-86.) Defense counsel then “renewed his motion for mistrial on the basis of
the prosecutor’s ‘intentional’ misconduct in ‘commenting on [the defendant’s] right to
take the Fifth Amendment.’ The [trial] court again denied [the defense] motion for
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mistrial, finding the prosecutor’s comments did no more than paraphrase instructions the
court had already given the jury.” (Id. at p. 86.)
The Court of Appeal held there was no Griffin error. (People v. Bradley,
supra, 208 Cal.App.4th at p. 86.) As to the prosecutor’s comments “that the jury should
not draw any adverse inferences from [the defendant’s] failure to testify, the trial court
properly denied the motion for mistrial. The prosecutor merely paraphrased the language
of CALJIC Nos. 2.60 and 2.61, which had already been read to the jury, and explained he
did not mean to suggest the jury should draw any adverse inference from [the
defendant’s] failure to testify. [¶] Even if the prosecutor’s references to [the
defendant’s] constitutional right not to testify can be regarded as error, ‘“indirect, brief
and mild references to a defendant’s failure to testify, without any suggestion that an
inference of guilt be drawn therefrom, are uniformly held to constitute harmless error.”’”
(Ibid.)
Here, too, the prosecutor’s remarks paraphrased the court’s jury instruction
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on the subject. As in People v. Carter, supra, 36 Cal.4th 1114, the prosecutor reminded
the jurors they could not talk during deliberations about defendant’s right not to testify or
consider it for any reason.
But defendant argues the prosecutor’s remarks were not meant to be
educational, but “were, at best, unnecessary and reckless, and, at worst, intentionally
2
The court instructed the jury with CALCRIM No. 355 as follows: “A
defendant has an absolute constitutional right not to testify. She may rely on the state of
the evidence and argue that the People have failed to prove the charges beyond a
reasonable doubt. Do not consider for any reason at all the fact that the defendant did not
testify. Do not discuss that fact during your deliberations or let it influence your decision
in any way.”
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unconstitutional.” Defendant notes the court had already instructed the jury on the
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subject and that defense counsel surely intended to do so in his closing argument.
“The test on review is whether there is a reasonable likelihood that the jury
misconstrued or misapplied the words in violation of the privilege against self-
incrimination.” (Levenson, Cal. Crim. Proc. (The Rutter Group 2013) ¶ 23:45, p. 23-51;
People v. Clair, supra, 2 Cal.4th at pp. 662-663.) It is not reasonably likely the jury did
so here. The prosecutor’s comments paraphrased the court’s instructions to the jury.
Jurors are “presumed to have followed the court’s instructions.” (People v. Sanchez
(2001) 26 Cal.4th 834, 852.) Indeed, the prosecutor’s comments reminded the jury they
could not discuss or consider in their deliberations that defendant did not testify.
In any event, the prosecutor’s remarks on defendant’s right not to testify
were brief, mild, and not the type of comments Griffin declared invalid. “[I]ndirect, brief
and mild references to a defendant’s failure to testify, without any suggestion that an
inference of guilt be drawn therefrom, are uniformly held to constitute harmless error.”
(People v. Hovey (1988) 44 Cal.3d 543, 572; People v. Turner (2004) 34 Cal.4th 406,
420-421.) Although the prosecutor’s comments were probably ill advised, inviting
scrutiny on appeal, it was not error to paraphrase the court’s own instruction, and, in any
3
As to the prosecutor’s intent, this was not the first time in his closing
argument that he gave the jurors an educational admonishment. Earlier, he had noted that
Studio Waterman employees had testified pursuant to immunity agreements: “[C]ommon
sense will tell you, Well, why is [defendant] charged and not these people? Good
question. But as you heard in the jury instruction, that isn’t something for you to
consider. So I understand you might be curious about it. You might think, well is it fair
or not? But as a jury sitting in judgment of [defendant’s] actions, you have to put that
issue completely aside and just judge [defendant’s] actions.” These comments
highlighted the issue for the jury. But clearly the prosecutor had no nefarious intent,
since it was not in the prosecution’s interest for the jury to speculate about the
employees’ culpability and to consider whether it was fair that defendant was singled out
for prosecution.
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event, was harmless beyond a reasonable doubt. (Hovey, at p. 572 [standard for prejudice
for Griffin error is harmless beyond a reasonable doubt].)
DISPOSITION
The judgment is affirmed.
IKOLA, J.
WE CONCUR:
RYLAARSDAM, ACTING P. J.
BEDSWORTH, J.
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