State v. Emerine , 308 Or. App. 211 ( 2020 )

211
Argued and submitted March 10; reversed and remanded for resentencing
to reduce restitution by the amount of $9,273.26, otherwise affirmed
December 30, 2020
STATE OF OREGON,
Plaintiff-Respondent,
v.
TERESA KAY EMERINE,
Defendant-Appellant.
Linn County Circuit Court
14CR24038; A168509
480 P3d 308
Defendant appeals from a supplemental judgment imposing $24,600.08 in
restitution as a result of her convictions for aggravated first-degree theft, ORS
164.057, second-degree theft, ORS 164.045, and second-degree forgery, ORS
165.007. She argues that, because the evidence in the record is insufficient to
establish a causal relationship between her criminal activities and the victim
company’s tax payments or penalties, the trial court erred in imposing $9,273.26
of the restitution amount under ORS 137.106. Held: The trial court erred as a
matter of law in imposing the $9,273.26 portion of the restitution award related
to the victim company’s tax expenditures. On this record, it was too specula-
tive to infer that defendant’s criminal actions caused the victim company’s tax
expenses.
Reversed and remanded for resentencing to reduce restitution by the amount
of $9,273.26; otherwise affirmed.
Thomas McHill, Judge.
Brett J. Allin, Deputy Public Defender, argued the cause
for appellant. Also on the briefs was Ernest G. Lannet,
Chief Defender, Criminal Appellate Section, Office of Public
Defense Services.
Rolf C. Moan, Assistant Attorney General, argued
the cause for respondent. Also on the brief were Ellen F.
Rosenblum, Attorney General, and Benjamin Gutman,
Solicitor General.
Before DeVore, Presiding Judge, and DeHoog, Judge, and
Mooney, Judge.
DeVORE, P. J.
Reversed and remanded for resentencing to reduce resti-
tution by the amount of $9,273.26; otherwise affirmed.
212 State v. Emerine
DeVORE, P. J.,
Defendant was convicted upon her guilty plea to
aggravated first-degree theft, ORS 164.057, second-degree
theft, ORS 164.045, and second-degree forgery, ORS 165.007.
She appeals from a supplemental judgment that ordered her
to pay restitution to the victim company.1 On appeal, defen-
dant raises four assignments of error. We reject her second,
third, and fourth assignments without written discussion.
We address only defendant’s first assignment. As to that
assignment, defendant argues that, because the evidence
in the record is insufficient to establish a causal relation-
ship between her criminal activity and the victim company’s
tax payments or penalties, the trial court erred in imposing
$9,273.26 of the restitution amount. We agree. We reverse
and remand the supplemental judgment with respect to the
restitution sum related to the company’s taxes. Otherwise,
we affirm.
We review the evidence supporting the trial court’s
restitution order in the light most favorable to the state.
State v. Akerman, 278 Or App 486, 487, 380 P3d 309 (2016).
In July 2013, Severson, the owner of the victim company,
Northwest Mechanical, discovered that defendant had been
misusing company funds. Northwest Mechanical is a small,
commercial industrial refrigeration and HVAC contract-
ing business, and it had about seven employees at the time
of defendant’s employment. Defendant started working as
the company’s full-time office manager around 2010. As
such, defendant was responsible for managing Northwest
Mechanical’s payroll, dispatching technicians to job sites,
managing the company’s financial records, and ensuring
that the company paid its taxes. Defendant was the primary
person who handled the company’s financial management
software.
Throughout her employment, defendant repeatedly
showed up late and missed days of work without notice. In
1
This is defendant’s second appeal of this matter. In the previous appeal, we
granted a joint motion from defendant and the state to remand for reconsider-
ation and resentencing. At the resentencing hearing, the trial court amended the
original sentencing order by reclassifying a compensatory fine as a restitution
award.
Cite as 308 Or App 211 (2020) 213
July 2013, while the company was preparing for a compet-
itive bidding process, Severson could not reach defendant
for a period of two weeks. When defendant showed up to the
bid submission meeting, Severson realized that defendant
was unprepared and had not been doing her job. Around the
same time, defendant had informed Severson that the com-
pany could no longer afford to pay for its employees’ health
insurance. When defendant refused Severson’s requests to
see the current financial records of the company, he became
suspicious. After Severson “hacked into the computer,” he
realized that defendant had been misusing company funds,
and he discharged defendant.
Severson hired a business services company to eval-
uate Northwest Mechanical’s finances, identify the damage
caused by defendant, and reconcile the company’s financial
obligations. During the process, Severson discovered that
defendant had been misappropriating the company’s money
in various ways. Defendant forged checks written to herself
and signed Severson’s name. Defendant wrote “draw” checks
to herself, ostensibly serving as payday loans against her
future paychecks, but never repaid the company. Defendant
also wrote “draw” checks disguised as payments to vendors.
Defendant purchased a cellphone and paid the bill using a
company credit card, although she knew that the company
did not provide any employee with a company phone. In addi-
tion, Severson believed that defendant had used the company
credit card to make various personal purchases at grocery
stores and gas stations and had used the card without permis-
sion to purchase a mattress and NFL tickets. While manag-
ing payroll, defendant paid herself for unauthorized overtime
hours—hours that Severson disputed that she had worked.
Severson also discovered that defendant had
neglected many of her employment responsibilities. Defen-
dant had failed to file the necessary paperwork to renew the
company’s workers’ compensation policy and had failed to
pay the company’s tax liabilities to the Oregon Department
of Revenue (ODR) and the Internal Revenue Service (IRS).
Defendant was charged with three counts of aggra-
vated first-degree theft, ORS 164.057, four counts of first-
degree theft, ORS 164.055, second-degree forgery, ORS
214 State v. Emerine
165.007, and first-degree forgery, ORS 165.013. Defendant
pleaded guilty to, and was convicted of, three charges: one
count of aggravated first-degree theft, ORS 164.057, one
count of second-degree theft as a lesser-included charge,
ORS 164.045, and second-degree forgery, ORS 165.007.
At the first of what would be two restitution hear-
ings with an intervening appeal, the state sought a resti-
tution award to the company in the amount of $99,442.65.
As relevant to defendant’s appeal, Severson testified that,
at the time of defendant’s employment, the company was
more vulnerable financially and less financially stable than
the company was after her employment. Severson testified
that, after defendant informed him that the company could
no longer pay for employees’ health insurance, he cancelled
his own health insurance and sold assets to maintain the
employees’ insurance. As to the tax payments sought as
restitution, Severson testified that the amount was entirely
attributable to penalties accrued as a result of defendant’s
failure to timely file the company’s taxes.
At the initial hearing, defendant conceded as to
certain restitution amounts based on specific instances of
misconduct, but she disputed that the state had met its evi-
dentiary burden as to the majority of the restitution sought.
Defendant conceded as to the cellphone expenses and some
credit card charges; she also conceded that she should pay
the $6,000 increased workers’ compensation costs because
it was her “error that caused that to be cancelled.” Beyond
that, defendant argued that the evidence was not sufficient
to support all of the remaining restitution sought by the
state, including a majority of the credit card transactions
and forged checks. As to the tax payments, defendant dis-
puted that the total amount sought, $9,273.26, was entirely
penalties that resulted from defendant’s conduct. She argued
that the amount was largely independently owed taxes.
Defendant also argued that she was entitled to payment for
the reported overtime amounts, even if the overtime was
unauthorized.
At the conclusion of the initial hearing, the trial
court ordered defendant to pay a compensatory fine. The
court began with the amount of $41,448.84 but reduced
Cite as 308 Or App 211 (2020) 215
it by the $16,848.76 insurance payment that the company
received, resulting in a fine amount of $24,600.08. The com-
pensatory fine, in relevant part, included $9,273.26 for tax
penalties the company incurred as “a result of defendant’s
conduct in this case” in failing to pay the company’s taxes,
as well as the $6,000 that defendant conceded she owed the
company for its new workers’ compensation policy.
In the earlier appeal of this case, we granted a joint
motion by defendant and the state to remand for reconsid-
eration and resentencing under the rationale of State v.
Kellison, 289 Or App 55, 57, 407 P3d 978 (2017), rev den, 362
Or 665 (2018) (holding that it is error to impose a compensa-
tory fine that exceeds the punitive fine and that a compen-
satory fine must be a subset of a punitive fine).
Upon remand, defendant argued that the $9,273.26
portion of the original compensatory fine attributable to
the company’s tax penalties was improper as a restitution
award under ORS 137.106 because the tax penalties were
not incurred as a result of defendant’s criminal activity.
Defendant argued that any tax penalties incurred were
only the result of her noncriminal, albeit negligent, perfor-
mance of her employment responsibilities. The trial court
declined to reconsider the underlying amount of the award
and amended the original sentencing order to impose the
$24,600.08 as a restitution award rather than a compensa-
tory fine.2
On appeal, defendant renews her argument that
the resentencing court erred in imposing the portion of the
restitution award attributable to the company’s tax pay-
ments. She argues that, because the evidence in the record
is insufficient to establish a causal relationship between her
convictions and the tax payments, a restitution award for
that expense is not allowed under ORS 137.106.3 The state
2
Upon remand, the state indicated that the court had already held a hearing
on restitution and made fact findings necessary for resentencing. No one objected
to the statement. The record indicates that the court proceeded based on the facts
adduced at the original restitution hearing.
3
In her third assignment of error, defendant raises a similar causation
argument regarding the $6,000 portion of the restitution order attributable to
the victim company’s increased workers’ compensation costs. Defendant failed to
preserve that argument, raising it for the first time in this appeal, and, as a con-
sequence, we do not address the issue here. See State v. Wyatt, 331 Or 335, 343, 15
216 State v. Emerine
responds that the tax payments are attributable to the theft
and forgery charges of which defendant was convicted. The
state argues that the court may infer that the amount of
money attributable to defendant’s theft negatively impacted
the victim company’s finances to the extent that the com-
pany was unable to meet its financial obligations, including
tax payments. The state concludes that, because the com-
pany was unable to make its tax payments on time, the com-
pany incurred the $9,273.26 penalty.
A trial court is authorized by ORS 137.106 to order
restitution when a person is convicted of a crime that has
resulted in economic damages.4 Under that statute, the
state must provide sufficient evidence of (1) criminal activ-
ities, (2) economic damages, and (3) a causal relationship
between the two. State v. Kirkland, 268 Or App 420, 424,
342 P3d 163 (2015). The record must support a nonspecu-
lative inference that there is a causal relationship between
the defendant’s criminal activities and the victim’s economic
damages. Akerman, 278 Or App at 490. The requirement of
a causal relationship means that the defendant’s criminal
activities must be a “but for” cause of the victim’s damages
and that the damages must have been a reasonably fore-
seeable result of the defendant’s criminal activities. State
P3d 22 (2000) (explaining that an error is unpreserved if defendant’s argument is
too general to alert the trial court to the specific error being challenged).
Given defendant’s concession at the hearing that she owed the $6,000 due to
her conduct, any error is not plain. But see State v. Martinez, 250 Or App 342, 344,
280 P3d 399 (2012) (concluding that an error is plain where the record is devoid
of any evidence from which the court could find that defendant’s criminal conduct
resulted in the contested damages). Even if the error were plain, these are not
circumstances that would call for the exercise of discretion to correct the error.
See State v. Inman, 275 Or App 920, 935, 366 P3d 721 (2015), rev den, 359 Or 525(2016) (explaining that the ease with which any error could have been avoided or
corrected should be a significant factor in an appellate court’s decision whether
to exercise its discretion to correct plain, but unpreserved, error).
4
In relevant part, ORS 137.106 states:
“(1)(a) When a person is convicted of a crime * * * that has resulted in
economic damages, the district attorney shall investigate and present to the
court, at the time of sentencing or within 90 days after entry of the judgment,
evidence of the nature and amount of the damages. * * * If the court finds
from the evidence presented that a victim suffered economic damages, in
addition to any other sanction it may impose, the court shall enter a judg-
ment or supplemental judgment requiring that the defendant pay the victim
restitution in a specific amount that equals the full amount of the victim’s
economic damages as determined by the court.”
Cite as 308 Or App 211 (2020) 217
v. Parsons, 287 Or App 351, 357, 403 P3d 497, adh’d to as
modified on recons, 288 Or App 449, 403 P3d 834 (2017),
rev den, 362 Or 545 (2018). “Criminal activities” are defined
as “any offense with respect to which the defendant is con-
victed or any other criminal conduct admitted by the defen-
dant.” ORS 137.103(1). “[W]hether those prerequisites have
been met is ultimately a legal question that will depend on
the trial court’s factual findings.” Akerman, 278 Or App at
490 (internal quotation marks omitted).
In this case, those standards require that defen-
dant’s criminal activities be causally related to the victim
company’s tax expenditures.5 Defendant was convicted of
aggravated first-degree theft, ORS 164.057, second-degree
theft, ORS 164.045, and second-degree forgery, ORS 165.007.
Defendant does not deny that it was her responsibility as
office manager to file the proper paperwork with the ODR
and IRS. By admitting that she failed to file the company’s
taxes on time, defendant concedes that she neglected her
employment duties. That admission of ordinary neglect,
however, does not resolve the issue of restitution for crim-
inal offenses. The issue we must decide is whether there
is evidence in the record to support a determination that
the company’s accrual of tax penalties can be deemed the
“but for” result of defendant’s theft and forgery, rather than
the result of the negligent performance of her employment
responsibilities.
The state relies on an inference from Severson’s tes-
timony that the company was left in such dire financial con-
dition from defendant’s theft that it could not pay its taxes
and thus incurred the tax penalties. On this record, however,
such an inference is questionable. Defendant admitted that
she committed theft and forgery between 2010 and 2013.
The company did not pay its tax bills for multiple quarters
in 2013. The only evidence regarding the company’s overall
financial condition at the time of defendant’s employment is
5
Because we reverse as to the tax “penalty” amount on the issue of causation,
we do not need to address the seeming difference between the owner’s testimony
that the entire $9,273.26 tax expenditure was for state and federal tax penalties
(rather than some portion of underlying tax liability) and the IRS 90-day letter
in Exhibit I indicating underlying federal taxes of $7,558.06 with the interest
because of late payment at $13.05.
218 State v. Emerine
Severson’s testimony on two points—one very general and
one indirect. He testified (1) that his company was “more
vulnerable financially” at the time of defendant’s employ-
ment than the company was at the time of the hearing and
(2) that, upon learning that the company could not afford
health insurance for its employees, Severson cancelled his
own health insurance and sold assets to cover the cost for
employee health insurance. Severson did not describe the
company’s financial constraints with any particularity, and
he did not describe any choice among priorities as to which
bills were paid first and which could not be paid.
Our precedents illustrate when a defendant’s crim-
inal activity may be linked to damages by a nonspecula-
tive inference. For example, we have determined that there
was a link between a defendant’s criminal activity that
involved leaving a stolen car unprotected in a front yard to
the later damage done to that car by way of a permissible
inference that leaving the car unattended facilitated that
damage. State v. Stephens, 183 Or App 392, 397, 52 P3d
1086 (2002). A defendant breaking a door during a burglary
was also linked to goods allegedly stolen during a subse-
quent burglary by a permissible, nonspeculative inference
that breaking the door created free access to the house for
later thieves. State v. Doty, 60 Or App 297, 300, 653 P2d 276(1982). Both of those cases involved damages that were tied
to a specific criminal activity of the defendant, such as the
careless abandonment of a car during the unauthorized use
of a vehicle or the breaking of a door during a burglary.
We have found it too speculative to infer a connec-
tion between a defendant’s criminal activity and proposed
damages where the link to a defendant’s criminal activity
is merely the general occurrence of similar facts and events
surrounding separate damages or crimes. For example,
where a defendant admitted to intentionally damaging
some pairs of pants, it was too speculative to infer that the
defendant stole two other pairs of pants merely because
they went missing under similar “facts and events” as the
admitted criminal conduct. Parsons, 287 Or App at 357-59.
Similarly, in Ackerman, 278 Or App at 491-92, it was too
speculative to infer that, because a defendant was found
guilty of one instance of theft, a defendant was responsible
Cite as 308 Or App 211 (2020) 219
for all thefts at the same property over the previous two
years. Likewise, a defendant’s conviction for receipt of a sto-
len jewelry armoire, without more, did not support a non-
speculative inference that the defendant also initially stole
the armoire or the jewelry it contained. State v. Ivory, 231 Or
App 381, 386, 220 P3d 56 (2009).
The state’s argument resembles the latter cases
where we concluded that the causal inferences were too
speculative. Those cases demonstrate that the coincidence
of a general circumstance—such as a company’s financial
instability over a long period of time—and the defendant’s
criminal activity is not enough to establish a causal con-
nection with particular damages. Here, Severson’s state-
ments are only anecdotal and generalized statements that
left the court to speculate about the specifics of any con-
nection between defendant’s theft and the company’s taxes.
His statements do not, without more, support a reasonable
inference that the financial impact of defendant’s theft
and forgery was so severe that the company could not have
arranged to pay its federal taxes as it had arranged to pay
employee health insurance. There is no evidence permitting
a reasonable inference that the company did not pay its tax
bill because it lacked the necessary funds due to defendant’s
forgeries or thefts. When the requisite causal relationship
between defendant’s offenses and the victim’s expenses is so
speculative, causation cannot be found to exist. Restitution
for such speculative damages cannot be imposed under ORS
137.106.
We conclude that the trial court erred as a mat-
ter of law in imposing the $9,273.26 portion of the resti-
tution award related to the company’s tax expenditures.
Accordingly, we reverse and remand for resentencing to
eliminate that portion of the supplemental judgment on res-
titution. Otherwise, we affirm.
Reversed and remanded for resentencing to reduce
restitution by the amount of $9,273.26; otherwise affirmed.