State v. Ramos ( 2016 )

No. 4 February 19, 2016 581
IN THE SUPREME COURT OF THE
STATE OF OREGON
STATE OF OREGON,
Respondent on Review,
v.
EMA RAMOS,
Petitioner on Review.
(CC C092342CR; CA A150423; SC S062942)
On review from the Court of Appeals.*
Argued and submitted September 15, 2015.
Morgen E. Daniels, Deputy Public Defender, Salem,
argued the cause and filed the brief for petitioner on review.
With him on the brief was Ernest G. Lannet, Chief Defender,
Office of Public Defense Services.
Doug M. Petrina, Assistant Attorney General, Salem,
argued the cause and filed the brief for respondent on review.
With him on the brief were Ellen F. Rosenblum, Attorney
General, and Paul L. Smith, Deputy Solicitor General.
Amy C. Liu, Portland, filed the brief for amicus curiae
National Crime Victim Law Institute. With her on the brief
was Margaret Garvin.
Before Balmer, Chief Justice, and Kistler, Walters,
Landau, Baldwin, Brewer, and Nakamoto, Justices.**
WALTERS, J.
The decision of the Court of Appeals and the judgment of
the circuit court are affirmed.
______________
**  On appeal from Washington County Circuit Court, Kirsten E. Thompson,
Judge. 267 Or App 164, 340 P3d 703 (2014).
**  Linder, J., retired December 31, 2015, and did not participate in the deci-
sion of this case.
582 State v. Ramos
Case Summary: Defendant was convicted of second-degree arson and
attempted first-degree aggravated theft after she set fire to her restaurant and
attempted to collect insurance proceeds. She was ordered to pay restitution,
including restitution to her own insurer for the expenses relating to the investiga-
tion of the arson and defendant’s fraudulent insurance claim. Defendant argued
that the insurer’s expenses did not qualify as “economic damages” under ORS
137.106. The trial court and Court of Appeals rejected defendant’s arguments.
Held: 137.106 requires that economic damages be reasonably foreseeable in order
to be recovered as restitution. The American Rule, which generally precludes a
party in a civil case from recovering costs and attorney fees incurred in that case,
does not preclude an award of the type of restitution at issue here, which related
to investigation of defendant’s claim for insurance benefits and its involvement in
the underlying civil proceeding. Defendant is incorrect that the type of damages
at issue should be deemed not recoverable as a matter of law.
The decision of the Court of Appeals and the judgment of the circuit court
are affirmed.
Cite as 358 Or 581 (2016) 583
WALTERS, J.
After defendant set fire to her restaurant and filed
a fraudulent claim with her insurance company for dam-
age to restaurant equipment, she was convicted of second-
degree arson and attempted first-degree aggravated theft.
Thereafter, the state sought a restitution award against
defendant. Under ORS 137.106,1 the trial court ordered
defendant to pay restitution and included in its restitution
award to one of the victims, defendant’s insurer, fees that the
victim had paid to attorneys and investigators for their time
spent in investigating defendant’s claim for benefits and in
providing grand jury and trial testimony. Defendant chal-
lenged that award on appeal, claiming that it was improper
to include those investigation and witness fees in the award.
The Court of Appeals affirmed the restitution award, State
v. Ramos, 267 Or App 164, 340 P3d 703 (2014), as do we.
The pertinent facts are undisputed. Defendant
operated a restaurant on premises that she leased, and, in
December 2008, set fire to the restaurant. Within a day,
defendant called her insurer, Oregon Mutual Insurance
Company (Oregon Mutual), to make a claim for loss to busi-
ness property. Oregon Mutual investigated the claim and
hired attorney Daniel Thenell of the law firm Smith Freed
& Eberhard (Smith Freed) in December 2008 to “provide
legal guidance to the insurance company to determine its
coverage obligations” and to “steer the investigation into
the cause and origin of the fire and whether there would be
coverage for the fire.” At defendant’s trial, Thenell testified
that his practice included doing “coverage investigations for
insurance companies.”
Thenell actively participated in Oregon Mutual’s
investigation of defendant’s claim, and he also retained
1
ORS 137.106(1)(a) provides:
“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 judgment or supple-
mental 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.”
584 State v. Ramos
others to assist him. Those persons included a private fire
investigation firm to investigate the cause and origin of the
fire, a forensics firm to examine and test electrical compo-
nents in order to determine the cause and origin of the fire,
and a private investigator to take witness statements and
gather information. Thenell also ordered a credit check that
revealed defendant’s financial situation, including the fact
that she was behind on her home mortgage.
Oregon Mutual denied defendant’s claim approx-
imately one month after the fire, and the state charged
defendant with second-degree arson and attempted first-
degree aggravated theft. After defendant was convicted of
those crimes, the state sought an award of restitution on
behalf of Oregon Mutual in the sum of $28,417.98, and the
court awarded that sum.2
On appeal to the Court of Appeals, defendant
objected to two categories of restitution that the trial court
had awarded: (1) the attorney fees that Oregon Mutual had
paid to Smith Freed, and (2) the expenses that Oregon
Mutual had paid for the other investigators’ time in investi-
gating defendant’s claim and in presenting grand jury and
trial testimony. Alternatively, defendant argued that an
award of the amounts that Oregon Mutual had paid inves-
tigators after it had denied her claim was impermissible.
Ramos, 267 Or App at 174. According to defendant, those
portions of the restitution award violated limitations on
liability drawn from civil law and applicable through the
statutory definition of “economic damages,” ORS 137.103(2),
referenced in the criminal restitution statute, ORS 137.106.
The state responded that the challenged categories
of restitution met the terms of ORS 137.106 and the defi-
nition of “economic damages” found in ORS 137.103(2) in
that they were “objectively verifiable monetary losses” that
“resulted from defendant’s criminal activities.” The Court of
Appeals agreed. Id. at 178-79. In reaching that conclusion,
the Court of Appeals rejected defendant’s argument that
2
Defendant leased the restaurant and the trial court also ordered defendant
to pay restitution to the restaurant owner and the owner’s insurer for fire damage
to the building in which defendant’s restaurant was located; defendant does not
challenge the imposition of restitution for those items.
Cite as 358 Or 581 (2016) 585
“economic damages,” as that term is used in ORS 137.106,
are limited to damages that would be recoverable in a civil
action and therefore that they must be reasonably foresee-
able. The court reasoned that, in amending the restitution
statutes in 2005, the legislature had substituted the term
“economic damages” for “pecuniary damages.” “Pecuniary
damages” had been defined to include only “damages that
are recoverable in a civil action;” the definition of “economic
damages” did not include that phrase. Id. at 175. Therefore,
the court explained, a court must award as restitution all
of a victim’s expenses that meet the definition of “economic
damages” without regard to whether such expenses would
be recoverable in a civil action. Further, the court explained,
ORS 137.106 requires that a court award all of a victim’s
economic damages that “result from” a defendant’s criminal
activities and that that requirement is met when the damages
would not have been incurred “but for” the defendant’s crim-
inal conduct. Id. at 177. The court concluded that because,
in the present case, it was undisputed that “but for defen-
dant’s false claim,” Oregon Mutual would not have incurred
any of the claimed expenses, the trial court had not erred
in awarding them. Id. at 177-80. The court also reached the
same conclusion as to the expenses that Oregon Mutual had
incurred after it decided to deny defendant’s clam, including
the challenged charges relating to grand jury and trial testi-
mony in defendant’s criminal case. Id. at 178.
In this court, defendant takes issue with the prem-
ise from which the Court of Appeals reasoned—that “eco-
nomic damages,” as that term is used in ORS 137.106, are
not limited to damages that would be recoverable in a civil
action. Defendant argues that when the legislature amended
ORS 137.106 in 2005, it did not intend to alter the types of
damages that are recoverable in restitution; the legislature
intended only to change the terms it used to describe those
damages. According to defendant, the legislature intended
only to substitute the term “economic damages” for the term
“pecuniary damages”; it did not intend to preclude appli-
cation of civil law concepts that limit the recovery of such
damages. Thus, defendant argues, a “but-for” connection
between a defendant’s crime and a victim’s expenses is “nec-
essary but not sufficient to establish that those expenses
586 State v. Ramos
are economic damages.” Defendant explains that, in a civil
action, economic damages also must be reasonably foresee-
able and contends that that same limitation applies to “eco-
nomic damages” awarded as criminal restitution. Likewise,
defendant contends, attorney fees and litigation costs are
not awarded as damages in a civil action and therefore
may not be awarded as damages in a restitution proceed-
ing. Defendant argues that, because the trial court failed
to apply those applicable civil law principles, the trial court
erred in awarding Oregon Mutual the challenged expenses
under ORS 137.106.
The state adopts the reasoning of the Court of
Appeals and contends that the causal connection between
a defendant’s criminal activities and a victim’s damages
required by ORS 137.106 is factual, “but-for” causation.3
Nevertheless, the state recognizes that “but-for” causation
is not limitless. The state acknowledges that the “factual-
causation test also includes a narrow exclusion for losses
that are too remote or attenuated,” but argues that reason-
able foreseeability does not determine the applicability of
that exclusion. The state contends that reasonable foresee-
ability is a civil law concept that is not incorporated in ORS
137.106. The same is true, the state argues, of the civil law
principle that bars the recovery of attorney fees and litiga-
tion costs in civil actions, absent statutory or contractual
authority. That principle, the state asserts, is inapplicable
in a restitution proceeding.
Thus, this case requires us to determine whether a
criminal restitution award is subject to two limitations on
damages drawn from civil law: (1) that damages are lim-
ited to harms that result from reasonably foreseeable risks;
and (2) that attorney fees and litigation costs are generally
not recoverable unless authorized by statute or contract. For
3
In this case, the parties discuss factual causation as “but-for” causation,
and we therefore use that terminology. We note, however, that in some circum-
stances, this court has discussed factual causation as requiring a showing that
the conduct at issue was a “substantial factor” in bringing about a result. See,
e.g., Lasley v. Combined Transport, Inc., 351 Or 1, 7-8, 261 P3d 1215 (2011) (dis-
cussing cause in fact in “substantial factor” terms). Because the parties in this
case have discussed factual causation in terms of “but-for” causation, we need
not consider whether the factual causation required by ORS 137.106 is limited to
“but-for” causation, and we express no opinion on that issue.
Cite as 358 Or 581 (2016) 587
the reasons that follow, we conclude, first, that the statutory
definition of “economic damages,” as used in ORS 137.106,
does require, when appropriately raised, a reasonable fore-
seeability analysis; and second, that we will not apply the
civil law bar on the recovery of attorney fees on the circum-
stances presented in this case.
We begin our analysis with the reasonable foresee-
ability limitation and the text of ORS 137.106(1)(a), which
provides as follows:
“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 sentenc-
ing 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 judgment or supplemental
judgment requiring that the defendant pay the victim res-
titution in a specific amount that equals the full amount of
the victim’s economic damages as determined by the court.”
Thus, ORS 137.106(1) requires that a defendant pay resti-
tution equal to the full amount of a victim’s “economic dam-
ages” that “result from” the defendant’s criminal activity.
ORS 137.103(2) defines the term “economic damages.” ORS
137.103(2) provides that the term “economic damages” as
used in ORS 137.106 “[h]as the meaning given that term in
ORS 31.710, except that ‘economic damages’ does not include
future impairment of earning capacity.”4 ORS 31.710(2)(a)
defines “economic damages” as follows:
4
ORS 137.103(2) provides:
“(2)  ‘Economic damages’:
“(a)  Has the meaning given that term in ORS 31.710, except that ‘eco-
nomic damages’ does not include future impairment of earning capacity; and
“(b) In cases involving criminal activities described in ORS 163.263,
163.264 or 163.266 [concerning involuntary servitude and human traffick-
ing], includes the greater of:
“(A)  The value to the defendant of the victim’s services as defined in ORS
163.261; or
“(B)  The value of the victim’s services, as defined in ORS 163.261, com-
puted using the minimum wage established under ORS 653.025 and the over-
time provisions of the federal Fair Labor Standards Act of 1938 (29 U.S.C.
201 et seq.).”
588 State v. Ramos
“ ‘Economic damages’ means objectively verifiable mone-
tary losses including but not limited to reasonable charges
necessarily incurred for medical, hospital, nursing and
rehabilitative services and other health care services,
burial and memorial expenses, loss of income and past
and future impairment of earning capacity, reasonable
and necessary expenses incurred for substitute domestic
services, recurring loss to an estate, damage to reputation
that is economically verifiable, reasonable and necessarily
incurred costs due to loss of use of property and reasonable
costs incurred for repair or for replacement of damaged
property, whichever is less.”
As is obvious, neither ORS 137.106 nor the definition
of economic damages in ORS 31.710(2)(a) requires that the
damages awarded in restitution be the damages that would
be recoverable in a civil action. The statute requires only
that the damages be “objectively verifiable monetary losses”
that “result from” a defendant’s criminal activity. Nor, the
state argues, can such a requirement be imported by means
of legislative history. In 2005, when it substituted the defi-
nition of “economic damages” for the definition of “pecuniary
damages,” the legislature eliminated reference to damages
“which a person could recover against the defendant in a
civil action,” and the state argues we should presume that it
did so intentionally.
Former ORS 137.106(1) (2003) provided:
“When a person is convicted of a crime * * * that has
resulted in pecuniary damages, the district attorney shall
investigate and present to the court, prior to the time of
sentencing, evidence of the nature and amount of such
damages. If the court finds from the evidence presented
that a victim suffered pecuniary damages, in addition to
any other sanction it may impose, the court shall:
“(a) Include in the judgment a requirement that the
defendant pay the victim restitution in a specific amount
that equals the full amount of the victim’s pecuniary dam-
ages as determined by the court.”
Former ORS 137.103(2) (2003), in turn, provided:
“ ‘Pecuniary damages’ means all special damages, but
not general damages, which a person could recover against
the defendant in a civil action arising out of the facts or
Cite as 358 Or 581 (2016) 589
events constituting the defendant’s criminal activities and
shall include, but not be limited to, the money equivalent
of property taken, destroyed, broken or otherwise harmed,
and losses such as medical expenses and costs of psycholog-
ical treatment or counseling.”
Thus, the major change made in 20055 was to
replace “pecuniary damages” (special damages, but not
general damages, which a plaintiff could recover against
a defendant in a civil action) with “economic damages” as
defined in ORS 31.710, while excepting future impairment
of earning capacity. That change reflected Oregon’s more
5
We recently summarized earlier history of the restitution statutes in State
v. Algeo, 354 Or 236, 247-48, 311 P3d 865 (2013):
“In 1976, * * * this court had interpreted the original version of the crimi-
nal restitution statute, former ORS 137.540(10) (1975), to permit a trial court
to award a victim an amount of restitution that was less than the amount of
the victim’s loss. State v. Stalheim, 275 Or 683, 552 P2d 829 (1976). Former
ORS 137.540(10) authorized a sentencing court to require, as a condition
of probation, that the defendant ‘[m]ake reparation or restitution to the
aggrieved party for the damage or loss caused by [the] offense, in an amount
to be determined by the court.’ (Emphases added.) The court interpreted the
term ‘restitution’ to mean ‘the return of a sum of money, an object, or the
value of an object which a defendant wrongfully obtained in the course of
committing the crime.’ Id. at 687-88. The court interpreted the term ‘repa-
ration’ to have a broader meaning—‘repairing’ or ‘restor[ing].’ However, the
court held that both terms encompassed only “reimbursement for the victim’s
liquidated or easily measurable damages resulting from the charged offense,”
id. at 688, and noted that it ‘[did] not mean to imply that a judge could not
impose restitution or reparation in an amount less than the victim’s loss.’ Id.
at 688 n 8.
“In 1999 * * * ORS 137.106 (1999), amended by Or Laws 2003, ch 670
§ 1—continued to permit trial courts to impose restitution in amounts that
were less than a victim’s full economic damages. At that time, the term ‘res-
titution’ was statutorily defined as the ‘full, partial or nominal payment of
pecuniary damages to a victim.’ ORS 137.103(3) (1999). ‘Pecuniary damages,’
in turn, were limited to ‘special damages * * * which a person could recover
against the defendant in a civil action’ arising out of the defendant’s crimi-
nal activities.’ ORS 137.103(2) (1999). Whether restitution was imposed, and
in what amount, was entirely within the sentencing court’s discretion. ORS
137.106(1) (1999) (making restitution a discretionary part of a defendant’s
sentence).”
In 1999, Oregon voters enacted a crime victim’s bill of rights, codified at
Article I, section 42, of the Oregon Constitution. See generally State v. Barrett,
350 Or 390, 255 P3d 472 (2011) (discussing enactment). Article I, section 42,
entitles a victim to “receive prompt restitution.” The meaning of that provision is
not at issue in the present case.
Further changes were made in ORS 137.103 and 137.106 in 2007 and again
in 2013, but those changes did not affect the portions of the statutes at issue here.
Or Laws 2007, ch 425, § 1, ch 482, § 1, ch 811, § 5; Or Laws 2013, ch 388, § 1.
590 State v. Ramos
current nomenclature for damages. As we explained in
Clarke v. OHSU, 343 Or 581, 608 n 17, 175 P3d 418 (2007):
“General damages * * * now are described as noneco-
nomic damages and encompass nonmonetary losses, includ-
ing damages for pain and suffering, emotional distress,
injury to reputation, and loss of companionship. See, e.g.,
ORS 31.710(2)(b) (defining noneconomic damages in the
context of a statute limiting recovery for noneconomic dam-
ages in civil cases). Special damages now are described as
economic damages and refer to the verifiable out-of-pocket
losses, including medical expenses, loss of income and
future impairment of earning capacity, and costs to repair
damaged property. See, e.g., ORS 31.710(2)(a) (defining eco-
nomic damages).”
See also Bass v. Hermiston Medical Center, P.C., 143 Or App
268, 270 n 1, 922 P2d 708 (1996) (after statutory changes
made in the 1980s, “the bench and bar appear to have gen-
erally equated economic damages with special damages and
noneconomic damages with general damages, even though
economic damages include some items of loss, such as future
impairment of earning capacity, that have historically been
styled as general damages”).
That history demonstrates that the 2005 amend-
ments to ORS 137.103 and 137.106 updated the nomencla-
ture for damages, but at the same time preserved the his-
torical inclusion of future impairment of earning capacity
as an item of “general” rather than “special” damages and
excluded it from the scope of the restitution statutes. Those
changes indicate that the legislature intended to modernize
the labels used to describe the types of damages recoverable
as restitution, but also intended to preserve the historical
practice of permitting recovery of only what had formerly
been known as “special” damages, and “which a person
could recover against the defendant in a civil action.”
In 2003, when the legislature had amended ORS
137.106 to make the imposition of restitution mandatory
rather than discretionary, (Oregon Laws 2003, chapter 670,
section 1), then-Representative Floyd Prozanski described
the restitution process as a process to allow a victim to ask
the criminal court to award the damages that the victim
would be able to obtain in a civil action. Prozanski explained
Cite as 358 Or 581 (2016) 591
that he approved of the restitution process because it
allowed the victim to recover what the victim had a right to
receive without having to go through the additional ardu-
ousness of a civil case. Audio Recording, House Committee
on Judiciary, SB 617, June 26, 2003, http://www.leg.state.
or.us/cgi-bin/list_archives.cgi?archive.2003s&HJUD&Ju-
diciary (accessed February 16, 2016).
In 2005, the legislature again amended ORS
137.106, but the 2005 legislative history does not indicate
that the legislature viewed restitution proceedings as hav-
ing a different purpose than that described in 2003.
In 2005, the Attorney General’s Restitution Task
Force submitted House Bill (HB) 2230 (2005) to the legis-
lature. Fred Boss, then-Chief Counsel of the Department
of Justice Civil Enforcement Division, described the bill to
a subcommittee of the House Committee on Judiciary and
told the subcommittee that the reference in the definition of
“pecuniary” damages to special and general damages was
confusing. Audio Recording, House Committee on Judiciary,
Subcommittee on Civil Law, HB 2230, January 24, 2005,
http://www.leg.state.or.us /cgi-bin/list_archives.cgi?ar-
chive.2005s&HJCIV&Judiciary+ Subcommittee+on+ -
Civil+Law (accessed February 16, 2016). The committee
chair sought clarification that the bill substituted a defini-
tion of “economic damages” that was commonly used in tort
law and referred to objectively verifiable monetary losses
and not things such as pain and suffering. Id. (statement
of Rep Bob Ackerman, committee chair). Another commit-
tee member verified that the definition included property
damage. Id. (statement of Rep Greg Macpherson); see also
Exhibit D, House Committee on Judiciary, Subcommittee on
Civil Law, HB 2230, January 24, 2005 (written testimony of
Jason Barber, Assistant Director, Crime Victim’s Assistance
Section, Department of Justice) (bill was intended to “clar-
ify the definition of damages,” thus increasing a victim’s
chances of recovering true economic losses). Nothing at that
public hearing or in the committee’s subsequent work ses-
sions indicated that the definitional changes that the leg-
islature made were meant to expand the scope of damages
recoverable as restitution or to change the purpose of resti-
tution proceedings.
592 State v. Ramos
The bill passed the House and went on to the
Senate Committee on Judiciary. At a public hearing, Kelly
Skye, representing the Oregon Criminal Defense Lawyers
Association, spoke against the bill, arguing that, as it
was worded at that point, it did, in fact, broaden the prior
definition because ORS 31.710 allowed recover for future
impairment of earning capacity, which would not have qual-
ified as “pecuniary” or “special” damages under the prior
version. Audio Recording, Senate Judiciary Committee,
HB 2230A, May 16, 2005, http://www.leg.state.or.us/cgi-
bin/list_archives.cgi?archive.2005s&SJUD&Judiciary
(accessed February 16, 2016). At a subsequent work session
on the bill, Legislative Counsel Joe O’Leary indicated that
the substitution of the term “economic” for “pecuniary” was
meant to clarify the law but not broaden the scope of dam-
ages that would be recoverable as restitution, and the com-
mittee chair, Senator Ginny Burdick, agreed. As a result of
the concerns raised previously—that incorporation of ORS
31.710 expanded the scope of damages available in restitu-
tion—the bill was amended to specifically exclude future
impairment of earning capacity from restitution, thus pre-
serving that aspect of the prior version of the statute. Audio
Recording, Senate Judiciary Committee, HB 2230A, June
16, 2005, http://www.leg.state.or.us/cgi-bin/list_archives.
cgi?archive.2005s&SJUD&Judiciary (accessed February
16, 2016). What was said about the bill, and the changes
that it underwent during the legislative process, indicate
that the legislature intended to clarify the types of dam-
ages that are recoverable as restitution, but not to differen-
tiate between the “economic damages” that a victim could
recover as damages in a civil action and those the victim
could recover as restitution.
One of the difficulties with the state’s position that
a court must discern the meaning of ORS 137.106 without
reference to civil law concepts is that the legislature adopted
for use in restitution proceedings the definition of “economic
damages” that applies in civil actions. And, the word “dam-
ages,” as a legal term of art, evolved as a term associated
with a plaintiff’s recovery against a defendant in a civil case.
See, e.g., Black’s Law Dictionary 416 (8th ed 2004) (defining
damages as “[m]oney claimed by, or ordered to be paid to, a
Cite as 358 Or 581 (2016) 593
person as compensation for loss or injury ”). Although there
may be differences in the types of damages that are recov-
erable at law and those that are recoverable in equity, and
in the types of damages that are recoverable in tort claims
and those that are recoverable in breach of contract claims,
a party seeking damages of any sort seeks those damages in
a civil action. See id. at 262 (defining “civil” as “[o]f or relat-
ing to private rights and remedies that are sought by action
or suit, as distinct from criminal proceedings ”). The term “damages” has a civil law connotation.
Likewise, the factual causation that ORS 137.106
requires also is a concept that also derives from civil actions.
ORS 137.106 requires that economic damages “result from”
a defendant’s crime, and “but-for” causation is a civil law
concept.6 See, e.g., Knepper v. Brown, 345 Or 320, 330, 195
P3d 383 (2008) (discussing “but-for” causation in reference
to intentional tort); Oregon Steel Mills, Inc. v. Coopers &
Lybrand, LLP, 336 Or 329, 339-40, 83 P3d 322 (2004) (dis-
cussing “but-for” causation in reference to negligence).
The question that this case presents is whether, in
giving meaning to the statutory terms “economic damages”
and “result from,” a court also must consider an additional
concept applicable in civil actions: that there be not only a
“but-for” factual connection between a defendant’s conduct
and damages but also that the damages be reasonably fore-
seeable. As to that question, the state argues that ORS
137.106 does not explicitly require reasonable foreseeability
and that this court cannot insert it. However, the state also
concedes that “at some point a causal connection will become
so attenuated that it is no longer accurate to say that the
crime ‘has resulted in’ the damages.”7 The state submits
6
The “but-for” rule of causation “may be stated as follows: The defendant’s
conduct is a cause of the event if the event would not have occurred but for that
conduct; conversely, the defendant’s conduct is not a cause of the event, if the
event would have occurred without it.” W. Page Keeton, Prosser and Keeton on the
Law of Torts § 41, 266 (5th ed 1984).
7
The state cites Paroline v. United States, 571 US ___, 134 S. Ct. 1710, 1721,
118 L. Ed. 2d 714 (2014) to explain its position. In that case, the Court observed
that
“proximate cause forecloses liability in situations where the causal link
between conduct and result is so attenuated that the so-called consequence
594 State v. Ramos
that the text of ORS 137.106 imposes a “narrow remoteness
limitation” that requires consideration of whether the con-
tested expenses are “too remote to be considered the results
of defendant’s crime.” For her part, defendant agrees that a
limit on “but-for” causation is inherent in the words of the
restitution statute, but she submits that “the word ‘result’
connotes the ‘rational,’ ‘necessary’ relationship that exists
between immediate cause and effect.” And, unlike the state,
defendant also contends that dictionary definitions are not
the only source of a limitation on a court’s award of expenses
that are “too remote.” Defendant argues that the required
causal connection should be analyzed by reference to tort
law, and specifically draws our attention to the connection
that must be shown to establish liability for negligence, cit-
ing Fazzolari v. Portland School Dist No IJ, 303 Or 1, 734
P2d 1326 (1987), a case that framed the inquiry in terms of
reasonable “foreseeability.”
We agree with defendant that the legislature’s
cross-reference to the definition of “economic damages”
applicable in civil actions, and the legislature’s purpose in
creating the restitution procedure as a substitute for a civil
proceeding, make civil law concepts relevant to our interpre-
tation of ORS 137.106. Fazzolari, although not directly appli-
cable, is informative. Fazzolari is a negligence case in which
the defendant advanced an argument that under the factual
circumstances presented in that case, it had no “duty” to
the plaintiff and so could not be held liable for its conduct.
303 Or at 3. The court explained that limitations on liability
generally found in civil causes of action, historically referred
to as “duty” and “proximate cause” in many jurisdictions,
should generally be discussed in terms of reasonable “fore-
seeability” in Oregon law.8 Id. at 11-12. Accordingly, the
is more akin to mere fortuity. For example, suppose the traumatized victim
of [a criminal defendant] needed therapy and had a car accident on the way
to her therapist’s office. The resulting medical costs, in a literal sense, would
be a factual result of the offense. But it would be strange indeed to make a
defendant pay restitution for these costs.”
8
As we explained in Wright v. Turner, 354 Or 815, 833, 322 P3d 476 (2014):
“ ‘Proximate cause’ is defined as a ‘cause that is legally sufficient to result
in liability; an act or omission that is considered in law to result in a conse-
quence, so that liability can be imposed on the actor.’ Black’s Law Dictionary
234 (8th ed 2004). As Prosser explains, ‘legal responsibility must be limited
Cite as 358 Or 581 (2016) 595
court said, “common-law negligence imposes liability for
harms of the general kind and to plaintiffs of the general
class placed at risk, harms that a reasonable factfinder,
applying community standards, could consider within the
range of foreseeable possibilities.” Id. at 12-13. Thus, under
Fazzolari, reasonable foreseeability determines a defen-
dant’s responsibility for its conduct and the kinds of harm
for which a defendant may be held liable.
In a criminal case, the same inquiry may not be
necessary. By statute, the legislature will have established
the conduct and the mental state that define the crime. A
court, often following a jury verdict, already will have deter-
mined the defendant’s criminal responsibility. In awarding
restitution as a sanction, then, a court will have no need to
determine whether a defendant who has violated the statute
should be held responsible for harm that the statute iden-
tifies. In most instances, the legislature already will have
made both of those determinations. Thus, taking this case
as an example, ORS 164.315 makes it a crime for a person
to start a fire and intentionally damage the property of
another in the circumstance in which the damages exceed
$750. That criminal statute imposes criminal responsibility
for damage to the property of another and a court need not
look beyond that criminal statute to determine that it may
award, as restitution, the property damages that resulted
from the defendant’s criminal acts. Thus, a Fazzolari inquiry
is neither necessary nor required.
That does not mean, however, that the concept of
reasonable foreseeability is inapplicable in a restitution pro-
ceeding. The question that this case presents is not whether
the trial court was correct to award some “economic dam-
ages” as restitution; certainly it was. As noted, defendant
does not challenge the aspect of the court’s restitution award
that required that she pay the restaurant owner and the
owner’s insurer for fire damage to the building in which
to those causes which are so closely connected with the result and of such
significance that the law is justified in imposing liability. Some boundary
must be set to liability for the consequences of any act * * *.’ [W. Page Keeton,
Prosser and Keeton on the Law of Torts § 41 (5th ed 1984)]. In Oregon, we
determine that boundary by whether the consequential injury is foreseeable.”
(Ellipsis in Wright; bracketed material added; citation omitted).
596 State v. Ramos
defendant’s restaurant was located. The narrower ques-
tion that this case presents is whether the civil law concept
of reasonable foreseeability is a concept that a court must
consider in deciding whether the particular kinds of harm
sought as restitution are recoverable. Thus, again taking
second-degree arson as an example, suppose that the state
were to seek not only an award of restitution for damage
to the victim’s property, but also the medical expenses that
the victim incurred when, in the course of responding to
the building’s fire alarm, the victim was injured in a car
accident. Those circumstances would present the narrower
question at issue in this case: whether reasonable foresee-
ability is a limiting concept that a court must consider in
deciding whether to award the particular damages sought
as restitution.
We conclude that reasonable foreseeability is a lim-
iting concept that applies to an award of economic damages
under ORS 137.106. The general rule in civil actions is that
damages are only recoverable if they are reasonably fore-
seeable. Welch v. US Bancorp, 286 Or 673, 703, 596 P2d 947
(1979) (discussing contract damages); see also Joseph Forest
Products v. Pratt, 278 Or 477, 564 P2d 1027 (1977) (same,
in context of negligence claim); Selman v. Shirley, 161 Or
582, 615, 91 P2d 312 (1939) (a defrauded party is entitled
to damages that “naturally and proximately resulted from
the fraud”). As the parties acknowledge, when the legisla-
ture required that a defendant make restitution to a victim
for the victim’s “economic damages,” the legislature did not
intend to require an award in circumstances in which the
damages are so attenuated that they cannot reasonably be
understood to “result from” a defendant’s conduct. The leg-
islature adopted the definition of “economic damages” that
applies in civil actions and described the required causal
connection between a defendant’s criminal activities and
a victim’s damages in terms that are used in civil actions.
We can presume that the legislature was cognizant of the
limitation that the civil law imposes on the recovery of
such damages. See Blachana, LLC v. Bureau of Labor and
Industries, 354 Or 676, 691, 318 P3d 735 (2014) (court will
presume that legislature is aware of existing common law).
Therefore, we think it likely that the legislature intended
Cite as 358 Or 581 (2016) 597
to apply the traditional civil law concept of reasonable
foreseeability to determine whether claimed damages are
“too remote” rather than intending that some other test of
“remoteness” apply.
In the civil law, the test that a court uses to deter-
mine whether damages are too attenuated to be recoverable
is whether a reasonable person in the defendant’s position
would have foreseen that someone in the victim’s position
could reasonably incur damages of the same general kind
that the victim incurred. Cf. Stewart v. Jefferson Plywood
Co., 255 Or 603, 608-09, 469 P2d 783 (1970)(limiting liabil-
ity to harms that are of the general kind to be anticipated
from the tortious conduct). That is the test that we conclude
the legislature intended to impose for use in restitution pro-
ceedings. In arriving at that conclusion, we do not interpret
ORS 137.106, as the state would have us do, to impose a
“narrow exclusion” for losses that, in a court’s opinion, are
“too remote or attenuated,” nor do we interpret the statute
to require, as defendant proposes, a “robust connection”
between the defendant’s criminal activities and the victim’s
expenses or that the causal connection be “direct.” The use of
those adjectives would imply a conclusion; it would not add
to the analysis. Instead, we interpret ORS 137.106 to impose
a requirement of reasonable foreseeability that is, as a gen-
eral matter, a factual question for the court. Cont. Plants v.
Measured Mkt. 274 Or 621, 625-26, 547 P2d 1368 (1976).
In this case, defendant did not argue to the trial
court that, as a factual matter, it was not reasonably fore-
seeable that Oregon Mutual would pay attorneys and
investigators for the time that they spent investigating
defendant’s claim for benefits and in providing grand jury
and trial testimony. Instead, the premise of defendant’s
argument was that Oregon Mutual’s expenditures were
not reasonably foreseeable as a matter of law. We dis-
agree. The record shows that within a day of a fire that
destroyed business property at her restaurant, defendant
called Oregon Mutual to make a claim for insurance ben-
efits. Oregon Mutual hired an attorney whose practice
was to “provide legal guidance to the insurance company
to determine its coverage obligations” and to help “steer
the investigation into the cause and origin of the fire and
598 State v. Ramos
whether there would be coverage for the fire.” That attor-
ney testified that he often performed similar services for
insurance companies and that he routinely hired others
to assist him in his investigation. The record does not
establish that Oregon Mutual’s expenses were not reason-
ably foreseeable as a matter of law. In fact, as defendant
acknowledges, “[i]t is generally reasonably foreseeable that
when an insured makes a claim on an insurance policy,
the insurance company will investigate the circumstances
to determine whether the claim is legitimate and must be
paid.”9 See, e.g., ORS 742.206 - 742.242 (setting forth stan-
dard fire insurance policy provisions and procedures).
Given defendant’s acknowledgement, it may be that
defendant’s stronger argument is an argument that the
Court of Appeals described as her “alternative argument”;
that is, that the fees and costs that Oregon Mutual incurred
after it denied defendant’s claim are not recoverable.
Although defendant does not use reasonable foreseeability
terms in describing that argument, it can be understood
as an argument that it was not reasonably foreseeable that
Oregon Mutual would continue to investigate defendant’s
claim for benefits after it had denied her claim. However,
even if defendant had made such an argument, we could not
conclude, as a matter of law, that Oregon Mutual’s expen-
ditures after its claim denial were not reasonably foresee-
able as a matter of law, particularly given an insured’s right
to challenge an insurer’s denial. See, e.g., ORS 742.238 -
742.240 (fire insurance provisions concerning when loss is
payable and when insured may challenge claim denial). An
argument that fees and cost were not reasonably foreseeable
must be made, in the first instance, to a trial court for its
factual determination.
In addressing defendant’s arguments thus far,
we have focused on the civil law concept of reasonable
9
We emphasize that we are discussing reasonable foreseeability in the con-
text of the circumstances of this case. We do not hold that, as a general matter, it
is reasonably foreseeable that a victim in a criminal case will incur investigation
expenses. Rather, it is the nature of the criminal activity at issue here (attempted
fraud), the nature of the victim’s business (insurance), and the facts of the case,
that govern the determination whether the claimed investigation expenses were
foreseeable.
Cite as 358 Or 581 (2016) 599
foreseeability. We do so because reasonable foreseeability is
a concept on which defendant has relied and not because we
mean to foreclose consideration of other civil law concepts
in future cases. For instance, in this case, defendant did
not argue to the trial court that Oregon Mutual’s expenses
were unreasonable in amount, see ORS 31.710(2)(a), or were
otherwise barred.10 For that reason, we do not address such
other civil law principles.11
We do, however, turn our attention to the second
civil law principle that defendant raises in this court: that
is, that attorney fees and costs that a party incurs in a civil
action are not “economic damages” that are recoverable
that a civil action. Accordingly, defendant contends, such
expenses also are not recoverable as restitution. Defendant
asserts that, as used in ORS 137.106, the term “economic
damages” does not encompass attorney fees and litigation
costs; when a party prevails in a civil action and seeks an
award of attorney fees or litigation costs, the fees or costs are
10
On review, defendant makes a brief argument suggesting that some of the
investigation costs that were claimed as restitution here should not have been
recoverable because they exceeded the amount that defendant had attempted to
steal from the victim, and a victim’s “decision to spend significantly more than
the amount stolen cannot be described as a reasonably foreseeable consequence
of the initial wrongful conduct.” That argument was not preserved and may be
contradicted by the record. There was evidence that Oregon Mutual could have
been liable under the policy for up to $74,000.
Defendant also briefly asserts that a party who “makes a claim on a policy—
whether the claim is fraudulent or legitimate—does not create extra work for the
insurance company,” and thus the cost of investigating claims cannot be recov-
ered as economic damages. Although defendant cites no authority for that propo-
sition, it is possible that she is referring to the general rule that “when the injury
is to a business, the cost of doing business is not generally recoverable, because
it cannot be said that the cost is attributable to defendant’s [tort]; overhead is
a fixed expense to the injured party both before and after the injury.” McKee
Electric Co. v. Carson Oil Co., 70 Or App 1, 7-8, 688 P2d 1360 (1984), aff’d on
other grounds, 301 Or 339, 723 P2d 288 (1986). That argument was not preserved
and defendant made no record demonstrating that the expenses that Oregon
Mutual incurred were part of its general cost of doing business. We therefore do
not address that argument.
11
We also do not mean to imply that the recovery of “economic damages”
makes a restitution proceeding into a civil proceeding. Restitution is a penalty
that serves a penal purpose. As the court stated in State v. N.R.L., 354 Or 222,
226, 311 P3d 510 (2013), “the theory behind restitution is ultimately ‘penalogical:
It is intended to serve a rehabilitative and deterrent purpose by causing a defen-
dant to appreciate the relationship between his criminal activity and the damage
suffered by the victim.’ ” (Quoting State v. Hart, 299 Or 128, 138, 699 P2d 1113
(1985).
600 State v. Ramos
awarded pursuant to statute or contract but not as an ele-
ment of “damages.” Defendant asserts that the same should
hold true for victims in restitution proceedings. According
to defendant, victims are entitled, under ORS 137.106, to
an award of “economic damages,” but that term should be
defined as it is in the civil arena and should not include the
attorney fees or litigation costs that a victim incurs in a
criminal proceeding.
Defendant’s argument fails because it overstates
the civil law limitation on the recovery of attorney fees.
Defendant is correct that, in a civil action, a party is gen-
erally not entitled to an award of attorney fees or litigation
costs that that party incurs in that action, unless a statute
or contract allows for such recovery. Montara Owners Assn.
v. La Noue Development, LLC, 357 Or 333, 360, 353 P3d 563
(2015); see also Baker Botts L.L.P. v. ASARCO LLC, 573 US
___, 135 S. Ct. 2158, 2164, 192 L. Ed. 2d 208 (2015) (acknowl-
edging the “bedrock principle known as the American Rule:
Each litigant pays his own attorney’s fees, win or lose, unless
a statute or contract provides otherwise.”). Although that
limitation generally applies, its application in any particular
case depends on the specific claims and facts at issue. For
example, when a plaintiff brings a claim against a defen-
dant for damages, the plaintiff may seek, as an element of
damages, attorney fees and costs that the plaintiff incurred
in litigation with a third party. Montara, 357 Or at 360, see
also Huffstuter v. Lind, 250 Or 295, 301, 442 P2d 227 (1968)
(“[A]ttorney fees are generally allowable as damages in an
action against a defendant where the defendant’s tortious
or wrongful conduct involved the plaintiff in prior litiga-
tion with a third party.”); Dan B. Dobbs, 2 Law of Remedies
§ 9.2(3) (2d ed 1993) (If a defendant’s fraudulent misrepre-
sentation causes “the plaintiff to litigate with third person,
then the reasonable expenses of that litigation, including
the plaintiff’s own attorney fees, are recoverable as items of
damages consequent upon the misrepresentation”).
In Osborne v. Hay, 284 Or 133, 141, 585 P2d 674
(1978), this court explained that the American Rule applies
only to an award of fees incurred in litigation between two
parties and not to fees incurred by one of those parties
in separate litigation with a third party. In doing so, the
Cite as 358 Or 581 (2016) 601
court quoted from the Restatement (First) of Torts § 914, 591
(1939), which notes that third party litigation may include a
separate action brought by the state:
“ ‘A person who through the tort of another has been
required to act in the protection of his interests by bring-
ing or defending an action against a third person is entitled
to recover compensation for the reasonably necessary loss
of time, attorney fees and other expenditures thereby suf-
fered or incurred.’
“Comment A states that:
“ ‘The rule stated in this Section applies where the pre-
ceding action was brought either by a third person or by
the State and also where the present plaintiff has been led
by the defendant’s tort to take legal proceedings against a
third person. * * * ‘”12
Thus, although a party to a civil action will gen-
erally recover the attorney fees and costs incurred in that
action only if a statute or contract permits their recovery
qua fees and costs, there are instances in which attorney
fees and litigation costs incurred in separate litigation
may be recovered as an element of a plaintiff’s damages.
Defendant’s argument that the term “economic damages”
necessarily excludes attorney fees and litigation costs is
without merit.
We also reject defendant’s further argument that
the American Rule nevertheless should apply by analogy in
restitution proceedings as not applicable to this case Here,
even if we were to apply the American Rule, it would not bar
recovery of the attorney fees and costs that Oregon Mutual
incurred. Those fees and costs fall into two categories—
attorney fees and costs that Oregon Mutual incurred in hir-
ing an attorney and non-attorney investigators to investi-
gate defendant’s claim for benefits, and costs that Oregon
Mutual incurred when it paid its non-attorney investigators
12
The Restatement (Second) of Torts § 914, 492 (1974), contains a very simi-
lar provision, and the comment indicates that the subsection is applicable “when
the preceding action was brought against the present plaintiff either by a third
person or by the state, and also when the present plaintiff has been led by the
defendant’s tort to take legal proceedings against a third person.” Id. 493, § 914,
comment b.
602 State v. Ramos
for their time in giving grand jury and trial testimony in
defendant’s prosecution.
The fees that Oregon Mutual incurred in employ-
ing Smith Freed to investigate defendant’s claim for benefits
were not fees that Oregon Mutual paid to have an attor-
ney represent it in litigation against defendant; they were
expenses that Oregon Mutual incurred because defendant
filed a claim for benefits and Oregon Mutual had to decide
whether to pay that claim. The American Rule would not
bar the recovery of those attorney fees and non-attorney
investigative costs.
The second category of litigation costs at issue here
concerns the costs that Oregon Mutual paid to its non-at-
torney investigators for their time giving testimony in the
underlying criminal prosecution of defendant. As discussed
above, a restitution hearing takes place after a defendant
has been convicted of a crime; it is a proceeding in which
the state seeks, as a sanction, an award of the damages that
the victim could recover if the victim were a plaintiff in a
hypothetical civil action suing the defendant for defendant’s
criminal/tortious conduct. Defendant argues that if a victim
were to bring a tort action for damages, the victim, as plain-
tiff, would not be able to recover the litigation costs incurred
in that action as damages and that a victim in a restitution
proceeding should be subject to the same limitation. What
defendant fails to recognize, however, is that if a victim
were to bring such a tort claim, the American Rule would
not preclude the victim from recovering fees and costs that
the victim incurred as a result of the victim’s involvement
in a separate proceeding, such as a criminal proceeding to
prosecute the defendant tortfeasor for a crime. See Osborne,
284 Or at 141 (quoting Restatement (First) of Torts § 914,
591 (1939)). Therefore, even if the American Rule were to
apply in restitution proceedings by analogy, an issue we
reserve and do not decide, that rule would not preclude a
victim from recovering attorney fees and costs that the vic-
tim incurred as a result of the victim’s involvement in the
underlying criminal prosecution. A victim in a restitution
proceeding is not required to bring a separate tort action
to obtain an award of damages, and therefore the prosecu-
tion of the defendant and the award of damages occur in the
Cite as 358 Or 581 (2016) 603
same criminal proceeding. We conclude, however, that the
combined procedure does not deprive the state from seeking,
on behalf of the victim, the same damages that the victim
could have obtained if the victim had filed a separate action,
and that those damages may include attorney fees and liti-
gation costs that the victim incurred in the underlying crim-
inal prosecution.13
That does not mean, however, that attorney fees
and litigation costs that a victim incurs in connection with
an underlying criminal prosecution are necessarily recover-
able in a restitution proceeding. Like all economic damages,
such fees and costs must “result from” a defendant’s crim-
inal activity in the “but-for” sense and also must be a rea-
sonably foreseeable result of the defendant’s criminal activ-
ities. That will not always be the case. To take an extreme
example, consider an instance in which police officers inves-
tigate a defendant’s criminal activity and, in the course
of that investigation, discover not only that the defendant
committed a crime against the victim but also that the vic-
tim herself committed an entirely unrelated crime. In that
instance, if the victim sought restitution for the economic
damages that she incurred as a result of the defendant’s
crime and included, as requested restitution, the attorney
fees that she incurred in defending herself against criminal
charges, a trial court potentially could find that the victim’s
crime would not have been discovered but for the defendant’s
criminal activity and therefore that there was a factual con-
nection between the fees and the defendant’s conduct. In
that situation, however, the victim’s own criminal activity,
prosecution and defense may not have been reasonably fore-
seeable, and a trial court could decide not to award those
costs as “economic damages” payable by the defendant.
In this case, defendant did not argue in the trial
court that the attorney fees and costs that Oregon Mutual
incurred either in investigating defendant’s fraudulent
insurance claim or in compensating its investigators for
their time in grand jury and trial proceedings were not
13
In this case, Oregon Mutual does not seek to recover attorney fees incurred
in the restitution proceeding itself, and, as noted, we do not decide whether such
fees and litigation costs would be recoverable.
604 State v. Ramos
reasonably foreseeable as a matter of fact or as a matter of
law. See ORS 476.270 (requiring insurer to report suspected
arson to State Fire Marshall); ORS 731.592(1) (regarding
insurer’s duty to cooperate with law enforcement in investi-
gating or prosecuting suspected criminal conduct involving
insurance). We therefore do not address those issues.
In summary, we conclude that (1) a court is pre-
cluded from awarding, as “economic damages” under ORS
137.106, expenses that the court concludes were not the
result of reasonably foreseeable risks of harm; (2) a victim’s
attorney fees and litigation costs may, in an appropriate
case, constitute “economic damages” under ORS 137.106;
and (3) the trial court did not err in its award of restitution
in this case.
The decision of the Court of Appeals and the judg-
ment of the circuit court are affirmed.