State v. Lalain , 136 Ohio St. 3d 248 ( 2013 )

[Cite as State v. Lalain, 136 Ohio St. 3d 248, 2013-Ohio-3093.]
THE STATE OF OHIO, APPELLEE, v. LALAIN, APPELLANT.
[Cite as State v. Lalain, 136 Ohio St. 3d 248, 2013-Ohio-3093.]
Criminal law—R.C. 2929.18—Restitution—Trial court has discretion to order
restitution in an appropriate case and may base the amount it orders on a
recommendation of the victim, the offender, a presentence investigation
report, estimates or receipts indicating the cost of repairing or replacing
property, and other information, but the amount ordered cannot be
greater than the amount of economic loss suffered as a direct and
proximate result of the commission of the offense—Trial court is required
to conduct a hearing on restitution only if the offender, victim, or survivor
disputes the amount of restitution ordered.
(Nos. 2012-0302 and 2012-0408—Submitted March 13, 2013—Decided
July 17, 2013.)
CERTIFIED by and APPEAL from the Court of Appeals for Cuyahoga County,
No. 95857, 2011-Ohio-4813.
_____________________
SYLLABUS OF THE COURT
1. A trial court has discretion to order restitution in an appropriate case and may
base the amount it orders on a recommendation of the victim, the offender,
a presentence investigation report, estimates or receipts indicating the cost
of repairing or replacing property, and other information, but the amount
ordered cannot be greater than the amount of economic loss suffered as a
direct and proximate result of the commission of the offense.
2. A trial court is required to conduct a hearing on restitution only if the offender,
victim, or survivor disputes the amount of restitution ordered.
____________________
SUPREME COURT OF OHIO
O’DONNELL, J.
{¶ 1} Daniel Lalain appeals from a judgment of the Eighth District Court
of Appeals affirming his conviction of a fifth-degree-felony theft offense, which
included an order to pay $63,121 in restitution for costs Aero-Instruments
incurred to investigate the theft and appraise the value of the stolen property. The
appellate court also certified that its decision conflicts with State v. Ratliff, 194
Ohio App. 3d 202, 2011-Ohio-2313, 955 N.E.2d 425 (2d Dist.), on the following
question:
Whether, despite the defendant’s failure to object, it is error for the
trial court to order a defendant to pay an amount of restitution in
the absence of a specific plea agreement and without a hearing or
evidence substantiating the economic loss claimed by the plaintiff?
131 Ohio St. 3d 1551, 2012-Ohio-2263, 967 N.E.2d 763.
{¶ 2} We determined that a conflict existed, id., accepted Lalain’s
discretionary appeal, 132 Ohio St. 3d 1486, 2012-Ohio-3334, 971 N.E.2d 962, and
consolidated the matters for review.
{¶ 3} R.C. 2929.18(A)(1) gives a sentencing court discretion to order
restitution but not in an amount greater than the amount of economic loss suffered
by the victim as a direct and proximate result of the commission of the offense.
The court may base the amount of restitution on an amount recommended by the
victim, the offender, a presentence investigation report, estimates or receipts
indicating the cost of repairing or replacing property, and other information.
Further, the statute mandates that the court must conduct a hearing if the offender,
victim, or survivor disputes the amount.
{¶ 4} In this case, the victim submitted a letter seeking to recover the
cost of an expert report on the value of its loss and the time spent by employees
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trying to identify and value the items taken—all of which were returned. It
sought $63,121 as restitution for expenses not incurred as the direct and
proximate result of the commission of the offense. Further, at sentencing,
although Lalain’s counsel disputed the amount of restitution, the court failed to
hold a hearing.
{¶ 5} Accordingly, we reverse the judgment of the court of appeals and
remand the case for further proceedings consistent with this opinion.
Facts and Procedural History
{¶ 6} Daniel Lalain worked as an engineer for Aero-Instruments, a
Cleveland company that designs aviation and aerospace components such as air-
speed and altitude sensors. In June 2008, Lalain resigned without notice, taking
electronic files copied from his work computer as well as duplicates of documents
from his office files. In addition, he retained two probes that he had previously
taken home for testing.
{¶ 7} On July 2, 2008, Aero-Instruments commenced a civil action
against Lalain seeking recovery for misappropriation of trade secrets and
proprietary product information, and it obtained a temporary restraining order to
prevent him from sharing any information with competitors. After Lalain
resigned, the company contacted law enforcement, claiming that he had stolen
intellectual property, and as a result, officers executed a search warrant at Lalain’s
home and recovered the property he had taken from Aero-Instruments.
{¶ 8} Aero-Instruments began an internal investigation to determine
what had been removed from its facility, and it retained the forensic accounting
department of Meaden and Moore to appraise the value of the intellectual
property that Lalain had misappropriated. However, it dismissed its civil suit in
January 2009 after it determined that all of its property had been recovered and
that Lalain had not disclosed any proprietary information.
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{¶ 9} On June 4, 2009, the Cuyahoga County Grand Jury indicted Lalain
for first-degree-felony theft, alleging that he had stolen intellectual property, test
data, computer equipment, computer memory devices, proprietary documents, and
product prototypes—property allegedly valued at $1 million or more.
{¶ 10} On August 16, 2010, Lalain pleaded guilty to an amended
indictment for fifth-degree-felony theft of property valued at $500 or more but
less than $5,000. Lalain acknowledged the potential criminal penalties that the
court could impose at sentencing, including restitution to Aero-Instruments.
However, the parties did not discuss the amount of restitution at the plea hearing,
nor did they include restitution as an express term of the plea agreement.
{¶ 11} At sentencing on September 24, 2010, the trial court referenced a
letter from Ryan Mifsud of Aero-Instruments describing economic losses the
company had suffered from the theft of its property. That letter, which the court
incorporated into the record, states:
We have been asked to provide information regarding the
financial impact on the company regarding the theft of property
and the subsequent process that was undertaken to identify and
value the property that was recovered by Cleveland Police in July,
2008. We have calculated the cost to Aero-Instruments for the
time spent by its employees in support of this case to be
$55,456.00. This estimate does not include any costs for materials
and supplies associated with the sorting, filing and copying of the
more than 9,000 pages of documents and over 100 items recovered
by the Cleveland Police from Mr. Lalain’s possession.
In order to provide the County Prosecutor’s Office with an
accurate valuation of the property that was recovered, Aero-
Instruments contracted with Meaden and Moore and their Forensic
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Accounting department to determine a valuation of the property
that was taken from the company. The cost associated with this
activity was $7,665.00. Aero-Instruments is looking for restitution
in the form of repayment by Mr. Lalain for these costs.
(Emphasis added.)
{¶ 12} Defense counsel asserted that at least some of these costs had been
incurred “in furtherance of a civil lawsuit,” and he stated, “I think that that is
where that Meaden & Moore record was generated for that purpose, not for the
criminal prosecution. I don’t think Daniel should be held responsible for any of
that cost.”
{¶ 13} In response, the prosecutor argued:
I also take exception with the point raised about the
Meaden & Moore accounting. That accounting was taken on by
Aero at the expressed advice of my supervisor, Paul Soucie, after
several meetings, so that they could discuss how this case could
actually be appreciated and valuated and evaluated. * * *
***
But that Meaden & Moore work cost a lot of money in
order to establish this case. Aero undertook a number of expenses
which the county could never have afforded to pay for in order to
investigate this case.
(Emphasis added.)
{¶ 14} The trial court sentenced Lalain to a four-year term of community
control and ordered him to pay restitution to Aero-Instruments in the amount of
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$63,121—$55,456 for the company investigation and $7,665 for the Meaden &
Moore accounting.
{¶ 15} Lalain appealed to the Eighth District Court of Appeals, assigning
error based on the order of restitution. The Eighth District affirmed, holding that
R.C. 2929.18(A)(1) did not require an evidentiary hearing to determine the
amount of restitution, because Lalain had not objected to restitution or disputed
the amount Aero-Instruments requested in its letter. The appellate court further
explained that the costs incurred by Aero-Instruments were the direct and
proximate result of the theft, because Aero-Instruments “had to complete an
accounting to determine value because of the unique nature of the intellectual
property involved.” 2011-Ohio-4813, ¶ 17. The court of appeals concluded that
restitution is not limited to the property value that corresponds to the degree of the
theft offense and the trial court therefore had not committed plain error in
imposing restitution in an amount greater than $4,999.99.
{¶ 16} The court of appeals certified that its decision conflicted with State
v. Ratliff, 194 Ohio App. 3d 202, 2011-Ohio-2313, 955 N.E.2d 425 (2d Dist.),
which holds that a restitution order must be supported by competent, credible
evidence and may not exceed the property value that corresponds to the degree of
the theft conviction. We determined that a conflict exists and also accepted
Lalain’s discretionary appeal.
{¶ 17} Lalain contends that unless there is a specific agreement to the
contrary, a restitution order cannot exceed the maximum property value that
corresponds to the degree of the theft conviction and the trial court here therefore
lacked authority to order restitution in an amount exceeding $4,999.99 on a
conviction for fifth-degree-felony theft. He maintains that the trial court allowed
Aero-Instruments to recover expenditures that were not the direct and proximate
result of his crime, but rather the company had incurred those costs to investigate
the theft, to value the property, and to prepare for litigation. And because the
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letter and the prosecutor put the trial court on notice that Aero-Instruments sought
restitution for costs that did not directly and proximately result from the crime,
Lalain contends that the court had a duty to conduct a hearing to determine the
amount of restitution, even in the absence of an express objection. Lalain does
assert, however, that defense counsel specifically disputed the amount of
restitution sought by Aero-Instruments, thus obliging the trial court to conduct an
evidentiary hearing to establish a basis for restitution.
{¶ 18} The state argues that the amount of restitution is determined by the
amount of the victim’s loss, not the degree of the felony or the value of property
stolen. Thus, according to the state, the trial court has discretion to order
restitution in any amount consistent with the victim’s actual economic loss, even
if that amount exceeds the property value used to determine the degree of the theft
conviction. It also asserts that the trial court may order restitution without a
hearing and based solely on the estimate provided by the victim when the plea
agreement does not specify an amount of restitution and the accused fails to
object. The state therefore maintains that the trial court properly ordered
restitution for Aero-Instruments’ costs of investigating the theft, appraising what
Lalain had taken, and determining whether he had compromised the
confidentiality of its intellectual property, because these expenditures constituted
actual economic loss sustained by the company as a consequence of the crime.
{¶ 19} Accordingly, two issues are presented: whether restitution for a
theft offense is limited to the property value corresponding to the degree of the
theft conviction and whether the court may order restitution without conducting a
hearing to determine the economic loss sustained as a direct and proximate result
of the commission of the offense if the offender disputes the amount of restitution.
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Law and Analysis
{¶ 20} R.C. 2929.18(A)(1) authorizes a trial court to impose restitution as
part of a sentence in order to compensate the victim for economic loss. The
statute also provides procedures for determining the amount of restitution ordered:
If the court imposes restitution, the court may base the amount of
restitution it orders on an amount recommended by the victim, the
offender, a presentence investigation report, estimates or receipts
indicating the cost of repairing or replacing property, and other
information, provided that the amount the court orders as
restitution shall not exceed the amount of the economic loss
suffered by the victim as a direct and proximate result of the
commission of the offense. If the court decides to impose
restitution, the court shall hold a hearing on restitution if the
offender, victim, or survivor disputes the amount.
(Emphasis added.)
{¶ 21} R.C. 2929.01(L) defines “economic loss” to mean
any economic detriment suffered by a victim as a direct and
proximate result of the commission of an offense and includes any
loss of income due to lost time at work because of any injury
caused to the victim, and any property loss, medical cost, or funeral
expense incurred as a result of the commission of the offense.
“Economic loss” does not include non-economic loss or any
punitive or exemplary damages.
(Emphasis added.)
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{¶ 22} R.C. 2929.18(A)(1) therefore limits the amount of restitution to the
amount of the economic detriment suffered by the victim as a direct and
proximate result of the commission of the offense. And although the statute
allows the court to base the amount of restitution on an amount recommended by
the victim or the offender, a presentence-investigation report, estimates or receipts
indicating the cost of repairing or replacing property, and other information, it
does not provide restitution for the costs of preparing such a report. It also
mandates that the court must hold a hearing on restitution if the offender, victim,
or survivor of the victim disputes the amount.
{¶ 23} The certified question merges the above statutory requirements
with the concept of the plea agreement and needlessly confuses the matter. The
statute contains no statement about incorporating restitution into plea agreements,
so that is not a statutory mandate. Rather, the statute vests the trial court with
discretion to impose restitution and to base it on listed statutory factors and other
information, but restitution may not exceed the amount of economic loss suffered
as a direct and proximate result of the commission of the offense. A hearing is
mandated only if the offender, victim, or survivor disputes the amount.
{¶ 24} In addition, we recognize that the amount of restitution is not
correlated to the degree of the theft offense. For example, R.C. 2913.02(B)(5)
states, “If the property stolen is a motor vehicle, a violation of this section is
grand theft of a motor vehicle, a felony of the fourth degree,” regardless of the
value of the motor vehicle. A trial court choosing to order restitution in a case of
grand theft of a motor vehicle is not restricted to the value corresponding to a
fourth-degree felony and may instead award restitution pursuant to R.C.
2929.18(A)(1).
{¶ 25} In this case, Aero-Instruments sought restitution of $55,456 “for
the time spent by its employees in support of this case” and an additional $7,665
for the report “to provide the County Prosecutor’s Office with an accurate
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valuation of the property that was recovered.” Thus, these expenditures are not
the direct and proximate result of the commission of the theft offense; rather, they
are consequential costs incurred subsequent to the theft to value the property that
had been taken from and later returned to Aero-Instruments. Further, as the state
conceded at oral argument, defense counsel did dispute the amount of restitution
claimed by Aero-Instruments. At a minimum, the trial court should have
conducted a hearing at that point. Thus, the trial court lacked authority to order
$63,121 in restitution in these circumstances.
{¶ 26} Because the factual premise of the certified question is not
supported by the record, we dismiss the conflict case as having been
improvidently certified.
Conclusion
{¶ 27} A trial court has discretion to order restitution in an appropriate
case and may base the amount it orders on a recommendation of the victim, the
offender, a presentence-investigation report, estimates or receipts indicating the
cost of repairing or replacing property, and other information, but the amount
ordered cannot be greater than the amount of economic loss suffered as a direct
and proximate result of the commission of the offense. A trial court is required to
conduct a hearing on restitution only if the offender, victim, or survivor disputes
the amount of restitution ordered.
{¶ 28} The judgment of the court of appeals is reversed, and the cause is
remanded for further proceedings consistent with this opinion.
Judgment reversed
and cause remanded.
PFEIFER, KENNEDY, FRENCH, and O’NEILL, JJ., concur.
O’CONNOR, C.J., and LANZINGER, J., concur in part and dissent in part.
____________________
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LANZINGER, J., concurring in part and dissenting in part.
{¶ 29} I agree that this case should be remanded for a hearing on
restitution, but because I respectfully dissent from the decision to avoid the
certified question, I write separately and would hold that the plea agreement here
imposed a limit on restitution.
{¶ 30} The trial court has discretion to order a defendant to pay restitution
to a victim as a financial sanction pursuant to R.C. 2929.18(A)(1), but the statute
expressly includes the caveat, “provided that the amount the court orders as
restitution shall not exceed the amount of economic loss suffered by the victim as
a direct and proximate result of the commission of the offense.” (Emphasis
added.) Because the degree of a theft offense is defined by the element of the
amount of loss to the victim (in this case, for a fifth-degree felony, $500 or more
but less than $5,000), restitution should be ordered within this range.
{¶ 31} In accepting a felony plea, a trial court is required to inform the
defendant of the maximum penalty involved and the consequences of the plea,
among other rights. See Crim.R. 11(C)(2).
{¶ 32} We have recognized that restitution is part of the sentence imposed
on a defendant. State v. Danison, 105 Ohio St. 3d 127, 2005-Ohio-781, 823
N.E.2d 444, syllabus. Thus, the amount of restitution ordered pursuant to R.C.
2929.18 affects the maximum penalty as well as the effect of the plea.
{¶ 33} Crim.R. 11(C)(2)(a) states that for a plea to be voluntary, a
defendant must understand the maximum penalty, which potentially includes
restitution. Lalain was charged originally with a felony of the first degree, which
could have exposed him to unlimited restitution. But Lalain should have been
able to rely on the degree of theft to which he pled guilty—a fifth-degree-felony
theft offense of stealing property valued between $500 and $5,000. This
limitation on value is an element of the offense and restitution should be no
greater than $4,999.99. However, Lalain could have been ordered to pay a greater
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amount of restitution as a specific part of a negotiated plea or as a stipulation.
Crim.R. 11(F) states:
When, in felony cases, a negotiated plea of guilty or no
contest to one or more offenses charged or to one or more other or
lesser offenses is offered, the underlying agreement upon which
the plea is based shall be stated on the record in open court.
.
{¶ 34} Thus, nothing prevents the state from requiring “full restitution” in
a greater amount than the theft offense to which a plea has been taken. The
defendant must know what the maximum consequences are when giving up rights
and entering a guilty plea.
{¶ 35} I would adopt the reasoning of the Second District Court of
Appeals in State v. Ratliff, 194 Ohio App. 3d 202, 2011-Ohio-2313, 955 N.E.2d
425 (2d Dist.), and hold that restitution is limited to the amount referred to in the
theft offense to which the defendant enters a plea unless the defendant agrees to a
higher amount as part of the plea agreement.
O’CONNOR, C.J., concurs in the foregoing opinion.
____________________
Timothy J. McGinty, Cuyahoga County Prosecuting Attorney, and Kristen
L. Sobieski, Assistant Prosecuting Attorney, for appellee.
John P. Hildebrand Co., L.P.A., and John P. Hildebrand Sr., for appellant.
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