Larry Eugene Berry v. State ( 2012 )

MEMORANDUM OPINION
No. 04-10-00924-CR
Larry Eugene BERRY,
Appellant
v.
The STATE of Texas,
Appellee
From the 175th Judicial District Court, Bexar County, Texas
Trial Court No. 2008-CR-3461
Honorable Mary D. Roman, Judge Presiding
Opinion by: Phylis J. Speedlin, Justice
Sitting: Karen Angelini, Justice
Phylis J. Speedlin, Justice
Rebecca Simmons, Justice
Delivered and Filed: May 9, 2012
AFFIRMED IN PART; REVERSED AND REMANDED IN PART
Larry Berry appeals his convictions for misapplication of fiduciary property and theft,
challenging the legal sufficiency of the evidence and the amount of restitution ordered. We
affirm Berry’s convictions, but reverse the portion of the judgment ordering restitution and
remand to the trial court for recalculation of the appropriate amount of restitution.
04-10-00924-CR
BACKGROUND
During 2004 and 2005, Larry Berry ran a franchise of Budget Blinds in San Antonio,
Texas. Berry independently owned and operated the franchise, while the corporate office in
California provided sales, marketing, and technical support. Berry’s business consisted of
measuring for, ordering, and installing window blinds and shutters for homes and businesses in
the San Antonio area. In late 2004, several customer complaints arose about Berry’s business,
with customers stating that Berry had taken their order and payment for blinds and/or shutters,
but never delivered the blinds and/or shutters and could not be reached at the store or by
telephone; the customer complaints increased during 2005. The Budget Blinds’ corporate office
terminated Berry’s franchise in 2005, and eventually repaid some of Berry’s customers for their
undelivered orders. After his franchise was terminated, Berry continued operating his business
under a new name, Blinds Depot. Berry continued taking orders and payment from customers,
but did not deliver the window treatments that were ordered. Several customers reported the
matter to the police, and a news story on Berry was aired as part of the “Troubleshooters” series
on a local television network. The police investigation led to Berry’s indictment on one count of
aggregated misapplication of fiduciary property valued at least at $20,000 but less than
$100,000, and one count of aggregated theft of lawful United States currency valued at least at
$20,000 but less than $100,000; both counts involved the same forty-one victims. See TEX.
PENAL CODE ANN. §§ 31.03(a), (e)(5), 32.45(b), (c)(5) (West Supp. 2011 & 2011); see id. at
§ 31.09 (West 2011) (permitting aggregation of amounts obtained pursuant to one scheme or
continuing course of criminal conduct).
At the jury trial, thirty-two of the forty-one alleged victims testified they entered into an
agreement with Berry to order and install blinds and/or shutters for their homes or businesses,
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paid Berry at least 75%, in some cases 100%, of the purchase price by either cash or check, but
did not receive their blinds and/or shutters. 1 The victims also testified that after Berry took their
order and received payment, he did not return or answer their repeated phone calls and could not
be found at the store. The jury found Berry guilty on both counts, misapplication of fiduciary
property and theft. On November 30, 2010, Berry was sentenced to ten years’ imprisonment on
each count, to run concurrently, and was ordered to pay total restitution of $78,733.44 to the 32
victims listed on an attachment to the judgment. Berry now appeals.
ANALYSIS
On appeal, Berry’s first two issues challenge the legal sufficiency of the evidence to
support his convictions, his third and fourth issues assert his convictions should be overturned
due to his bankruptcy discharge, and his fifth issue contends the restitution order should be
reformed because some victims were made whole by the Budget Blinds parent company or had
their claims discharged in bankruptcy.
Legal Sufficiency
In reviewing the legal sufficiency of the evidence, we determine whether, viewing all the
evidence in the light most favorable to the verdict, any rational trier of fact could have found the
essential elements of the offense beyond a reasonable doubt. Jackson v. Virginia, 443 U.S. 307,
319 (1979); Brooks v. State, 323 S.W.3d 893, 899 (Tex. Crim. App. 2010). The standard applies
equally to both direct and circumstantial evidence. King v. State, 29 S.W.3d 556, 565 (Tex.
Crim. App. 2000). In conducting a legal sufficiency review, we defer to the jury’s assessment of
the credibility of the witnesses and the weight to be given to their testimony. Brooks, 323
S.W.3d at 899.
1
Some customers received partial delivery of blinds.
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Misapplication of Fiduciary Property
In his first issue, Berry challenges the legal sufficiency of the evidence to support his
conviction for misapplication of fiduciary property. A person commits the offense of
misapplication of fiduciary property by intentionally, knowingly, or recklessly misapplying
property he holds as a fiduciary in a manner that involves substantial risk of loss to the owner of
the property. TEX. PENAL CODE ANN. § 32.45(b). Count One alleged, with respect to each
individual victim, that Berry did
intentionally, knowingly, and/or recklessly misapply property, namely: lawful
currency of the United States of America, having a value of . . . [dollar amounts
varied per victim], that the defendant held as a fiduciary or as a person acting in a
fiduciary capacity, contrary to AN AGREEMENT UNDER WHICH THE
DEFENDANT HELD THE PROPERTY, and in a manner that involved a
substantial risk of loss of the property to . . . the owner of said property . . . by
failing to perform as specified in the agreement and/or by applying the property
for purposes not related to the agreement with the owner.
Berry argues his conviction for misapplication of fiduciary property must be overturned because
there is no evidence that (i) he was a fiduciary with respect to his customers’ funds, or (ii) he
misapplied any customer’s funds.
Section 32.45(a)(1) defines a “fiduciary,” in relevant part, as any person acting in a
fiduciary capacity; the term “fiduciary capacity” is not defined. TEX. PENAL CODE ANN.
§ 32.45(a)(1)(C) (West 2011). In interpreting the meaning of an undefined statutory term, we
apply the plain and ordinary meaning of the words, reading them in context and construing them
in accordance with the rules of grammar and common usage. Gonzalez v. State, 954 S.W.2d 98,
103 (Tex. App.—San Antonio 1997, no pet.); TEX. GOV’T CODE ANN. § 311.011(a) (West 2005).
The plain and common meaning of the term “fiduciary” is “‘holding, held, or founded in trust or
confidence.’” Gonzalez, 954 S.W.2d at 103 (quoting WEBSTER’S THIRD NEW INTERNATIONAL
DICTIONARY 845 (1981)). Thus, a fiduciary is a person who has a duty, created by his own
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undertaking, to act primarily for another person’s benefit in matters connected with such
undertaking. Id. (citing BLACK’S LAW DICTIONARY 625 (6th ed. 1990)); Talamantez v. State,
790 S.W.2d 33, 35 (Tex. App.—San Antonio 1990, pet. ref’d) (“fiduciary is one in whom
another has justifiably reposed confidence to act in a certain manner”). A person receives money
in a fiduciary capacity “‘when the business which he transacts, or the money or property which
he handles, is not his or for his own benefit, but for the benefit of another person as to whom he
stands in a relation implying and necessitating great confidence and trust on the one part and a
high degree of good faith on the other part.’” Gonzalez, 954 S.W.2d at 103 (quoting BLACK’S
LAW DICTIONARY 625 (6th ed. 1990)). Within section 32.45, “misapply” means to deal with
property contrary to an agreement under which the fiduciary holds the property. TEX. PENAL
CODE ANN. § 32.45(a)(2)(A) (West 2011). The agreement need only be an understanding or
arrangement as to a particular course of action; the agreement need not be written. Bynum v.
State, 767 S.W.2d 769, 774-75 (Tex. Crim. App. 1989); Gonzalez, 954 S.W.2d at 104.
Here, each of the thirty-two victims testified that they had an agreement with Berry to
order and deliver the blinds and/or shutters they chose, and that the money they paid Berry up
front was for the specific purpose of ordering their window treatments, not for his own use or
benefit. Thus, the evidence shows Berry was clearly acting as a fiduciary when he accepted his
customers’ money for the particular purpose of ordering their blinds and/or shutters, and
pursuant to an agreement that the money was to be used for the benefit of the customers, not for
Berry’s own benefit. His customers trusted Berry to perform in accordance with their agreement,
and Berry was aware of the trust they reposed in him; therefore, Berry was required to act in a
fiduciary capacity with respect to his customers’ funds. See Talamantez, 790 S.W.2d at 35-36
(insurance agent who accepted money to purchase automobile insurance acted in a fiduciary
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capacity). The evidence showing that Berry dealt with his customers’ money contrary to their
agreement, and thus “misapplied” the money, consisted of the following: (1) the thirty-two
customers’ testimony that Berry never delivered their blinds and/or shutters (except for the three
partial deliveries), avoided their calls, and never refunded their money; (2) the police
investigator’s testimony that Berry’s bank records showed that he generally deposited customers’
checks into his business account and then promptly transferred them to his personal account;
Berry deposited an $8,000 check from Chris Elder for shutters into his business account, but
transferred it into his personal account and used the money to pay for a new home he bought on
Roan Bluff; Berry’s business account had a negative balance in February and March 2005 before
the bank closed the account; after March 2005, Berry no longer deposited customers’ checks into
the business account, but began cashing the checks at the customers’ banks; and (3) the
testimony of one customer, Chris Elder, who stated that Berry’s mother danced around the store
and exclaimed, “Woohoo, I’m going shopping” when Elder delivered the check for $8,000 to
pay for her shutters, giving her the impression that her money was not going to go to her shutters.
The jury was entitled to weigh and assess the credibility of all the evidence, and to draw
reasonable inferences from the basic facts to the ultimate facts. Williams v. State, 235 S.W.3d
742, 750 (Tex. Crim. App. 2007). There is legally sufficient evidence that Berry accepted his
customers’ money in a fiduciary capacity and dealt with the money in a manner contrary to his
agreement with the customers, failing to deliver the blinds and/or shutters and transferring the
payments to his personal account and using the money for his own benefit, thereby violating
section 32.45(b). See Talamantez, 790 S.W.2d at 37; Bynum, 767 S.W.2d at 777 (evidence was
legally sufficient to support finding that defendant misapplied property contrary to agreement
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when he cashed and failed to account for checks given to citizen’s committee for purpose of
supporting bond election).
Theft
Berry was also convicted of theft in Count II, based on the allegation that he unlawfully
appropriated the property he held as a fiduciary, i.e., the customers’ money, for his own benefit.
See Talamantez, 790 S.W.2d at 37 (discussing the difference between the offenses of
misapplication of fiduciary property, which requires the defendant be in a position of trust and
act contrary to the parties’ agreement, and theft which requires that the defendant appropriate
property for his own use). In his second issue on appeal, Berry argues his conviction for theft
must be reversed because there is no evidence of deception, i.e., that he had the intent to deceive
or deprive his customers of their money at the time of the transaction. Berry asserts the
customers gave him their money with effective consent and their claims for nonperformance
were merely a contractual dispute instead of a matter of theft. Count Two of the indictment
charged Berry with committing theft from each victim, alleging that Berry
with intent to deprive the owner . . . of property, namely: lawful currency of the
United States of America, did unlawfully, without the effective consent of the
owner, appropriate the property by acquiring or otherwise exercising control over
the property, which had a value of [dollar amounts varied per victim] . . . ,
namely, a check dated [dates varied per victim] . . . payable to Budget
Blinds/Larry Berry . . .
Section 31.03 of the Penal Code provides that a person commits the offense of theft if he
“unlawfully appropriates property with intent to deprive the owner of property;” appropriation is
unlawful when it is without the owner’s effective consent. TEX. PENAL CODE ANN. § 31.03(a),
(b)(1) (West Supp. 2011); McClain v. State, 687 S.W.2d 350, 353 n.7 (Tex. Crim. App. 1985) (to
“appropriate” means any exercise of control over the property in question); see Ehrhardt v. State,
334 S.W.3d 849, 852 (Tex. App.—Texarkana 2011, pet. ref’d) (listing elements of theft).
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Consent is not effective when it is induced by deception. TEX. PENAL CODE ANN. § 31.01(3)
(West Supp. 2011); Ehrhardt, 334 S.W.3d at 853 (to “induce” means “to bring about, produce,
or cause”). One means of deception is “promising performance that is likely to affect the
judgment of another in the transaction and that the actor does not intend to perform or knows
will not be performed; the mere failure to perform, without other evidence of the actor’s intent or
knowledge, is not sufficient proof that the actor did not intend to perform or knew the promise
would not be performed at the time the property was taken. TEX. PENAL CODE ANN. § 31.01(1)
(E) (West Supp. 2011); Wirth v. State, No. PD-1054-11, 2012 WL 931978, at *3 (Tex. Crim.
App. March 21, 2012). Theft in connection with a contract requires proof that appropriation of
the property was a result of false pretext or fraud, not merely that the defendant failed to return
the property after failing to perform. Wirth, 2012 WL 931978, at *3; Ehrhardt, 334 S.W.3d at
853-54; Jacobs v. State, 230 S.W.3d 225, 229 (Tex. App.—Houston [14th Dist.] 2006, no pet.).
In reviewing sufficiency of the evidence of this type of theft, the appellate court considers the
events before, during, and after commission of the offense, as well as the defendant’s actions
which show an understanding and common design to commit the offense. Wirth, 2012 WL
931978, at *3; Guevara v. State, 152 S.W.3d 45, 49 (Tex. Crim. App. 2004).
Berry argues there is no evidence he had the intent to deceive his customers when he
accepted their money, i.e., he claims there was no false pretext and he intended to perform the
contracts. He points to the evidence that all the customers voluntarily paid him in advance for
their blind and shutter orders, and some received partial delivery of their orders, while most of
the others were eventually repaid by the Budget Blinds parent corporation. 2 Berry asserts there
is no evidence of deception on his part, or of a scheme to defraud, and excuses his conduct as
“bad business practices” and “unfortunately typical of the economic times of the last ten years.”
2
The trial testimony was that 18 of the 32 victims who testified were repaid by Budget Blinds corporation.
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Berry asserts his case is similar to Phillips v. State, 640 S.W.2d 293 (Tex. Crim. App. 1982), in
which the court held the defendant’s failure to perform a contract to build a home addition was
insufficient to support his conviction for theft of the down payment. Phillips is distinguishable,
however, because the holding was based on the absence of any evidence of deception by false
impression of law or fact; it was a mere failure to perform. Id. at 294.
Here, by contrast, there is evidence in the record that supports a finding that it was more
than just a simple failure to perform the contracts. There is sufficient evidence to support a
reasonable inference that Berry promised performance of the contracts for window treatments in
order to induce the customers’ advance payment for the product, when he did not intend to
perform or knew he would not be able to perform the contracts. There was evidence that Berry
offered a discount to induce customers to pay by check or cash instead of by credit card. Many
of the checks were made payable to “Larry Berry” alone, while the others were made payable to
“Larry Berry/Budget Blinds” or “Larry Berry/Blinds Depot.” Berry consistently demanded
payment in advance for the orders – at least a 75% deposit, and in many cases 100% advance
payment. In addition, Lisa Masterson with Timber Blinds Manufacturer testified that Berry had
had an account with them since 2001, but it was closed in November 2004 due to nonpayment; at
the time, Berry owed $46,000 to Timber Blinds, which amount was ultimately charged off.
Masterson testified that, as of November 2004, Berry would have known that any orders he
placed with Timber Blinds would not be filled. The evidence showed that before November
2004, Berry took a total of $16,640 from four of the thirty-two victims who testified (Chris
Elder: $8,000; Beth Ann Enriquez: $6,200; Maria Vogt: $1,540; Yong Pak: $900). Therefore,
Berry had knowledge that the customer orders he took after November 2004 would not be filled
by Timber Blinds.
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Only three of the thirty-two victims in this case received any window treatments at all
from Berry – only partial deliveries of their orders; the other parts of their orders were never
delivered by Berry. Every customer testified that once Berry received their payment, he became
very difficult, if not impossible, to reach; he was not present in the store and would not return
repeated phone calls. One customer even tried to contact Berry to change the color of her blinds,
but could not reach him. None of the thirty-two customers received a refund from Berry, despite
requests for refunds; instead, Berry blamed the delivery delays on manufacturing problems and
the high humidity in Houston which delayed painting. Kristina Benca testified that when she
investigated the status of her order with the manufacturer, she was informed that no order existed
under her name or Berry’s name. As noted, supra, Chris Elder testified Berry’s mother indicated
she was going shopping with Elder’s $8,000 check for her wood shutters order. Berry’s bank
records showed that he did indeed use Elder’s $8,000 check to pay for the purchase of a new
home for himself.
While the customers voluntarily paid between 75% and 100% of the purchase price to
Berry in advance, their payment was induced by and made in exchange for Berry’s promise to
order and deliver their blinds and/or shutters in accordance with their agreement; thus, their
consent in handing over their money was not effective because they were induced by Berry’s
deception, i.e., his intent to deprive them of their money without performance of the contract.
While some of Berry’s practices, such as offering a discount for payment by cash or check, are
not by themselves evidence of an intent to deceive, and are in fact common business practices,
when viewed together with the other evidence of Berry’s complete failure to perform on twenty-
nine of the thirty-two contracts, his demands for payment up front, his excuses and avoidance of
the customer once they paid for the order, his refusals to refund any payments, his bank records
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showing he promptly transferred the payments to his personal account and used at least one
payment for his own home purchase, and the large number of victims, all tend to support the
jury’s finding that Berry intended to deceive the victims at the time he took their money. See
Wirth, 2012 WL 931978, at *3 (noting that, while the circumstantial evidence in that case “could
merely be [a] symptom[] of a ‘previously successful business [falling] off’ and ‘scramb[ling] for
money from … any available source,’” the jury made a rational inference from the evidence that
the defendant never intended to perform on the contracts and thus committed theft, and it was not
the role of the appellate court to substitute its view of the evidence).
Accordingly, we overrule Berry’s first two issues challenging the legal sufficiency of the
evidence to support his convictions on Counts I and II of the indictment.
Bankruptcy Discharge as Defense & Restitution
In his third and fourth issues, Berry asserts the bankruptcy court’s discharge of his debts
to customers who filed a proof of claim, and the absence of a fraud finding by the bankruptcy
court, renders the evidence legally insufficient to support his theft conviction, and operates to
collaterally estop his criminal prosecutions. In his fifth issue, Berry contends the restitution
order should be reformed to reflect that some victims were repaid by the Budget Blinds
corporation, and some who filed proofs of claim which were discharged in his bankruptcy
proceeding; he contends other victims who failed to participate in his bankruptcy proceeding
have “waived” their right to restitution.
In his brief, Berry cites to no authority holding that a discharge in bankruptcy collaterally
estops or operates as a defense to a criminal prosecution, or bars a restitution order. In fact, the
Court of Criminal Appeals has held to the contrary. In Cabla v. State, 6 S.W.3d 543, 549 (Tex.
Crim. App. 1999), cert. denied, 529 U.S. 1092 (2000), the court held that a trial court could order
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a defendant to pay restitution to his theft victims even though the sums had previously been
discharged as debts in the defendant’s federal bankruptcy proceeding. Berry acknowledges
Cabla, but tries to distinguish it, arguing Berry’s case is different because his victims’ claims
were repaid by the Budget Blinds corporation, and his bankruptcy petition was filed before he
was convicted of the criminal offenses. 3 Berry also asserts the court’s reasoning in Cabla is
flawed, and urges us not to follow it. First, we are bound by the Court of Criminal Appeals
holding in Cabla; secondly, we agree with its reasoning. The court based its holding on the
“pervasive differences between the goals of the criminal justice system and the bankruptcy
system,” noting that a goal of restitution is punishment while the goal of bankruptcy is to permit
an “honest and unfortunate debtor” to “begin his financial life anew.” Id. at 545-48 (quoting
Kelly v. Robinson, 479 U.S. 36, 46 (1986)). “As punishment, restitution attempts to redress the
wrongs for which a defendant has been charged and convicted in court.” Id. at 546 (citing
Martin v. State, 874 S.W.2d 674, 678 (Tex. Crim. App. 1994)). Thus, a discharge in a civil
bankruptcy proceeding has no effect on a criminal proceeding; its only effect is to extinguish the
defendant’s liability on any civil claim arising out of the debt. 4 Id. at 548-49 (that defendant’s
victims were named as creditors and bankruptcy court discharged defendant’s debts prior to
conviction had no impact on trial court’s restitution order); see United States v. Carson, 669 F.2d
216, 217 (5th Cir. 1982); United States v. Pepper, 51 F.3d 469, 473 (5th Cir. 1995).
3
We may not consider the documents attached to Berry’s brief, consisting of a printout with information about his
bankruptcy case, because they were not presented to the trial court and are not part of the appellate record. TEX. R.
APP. P. 34.1; Ramirez v. State, 104 S.W.3d 549, 550-51 n.9 (Tex. Crim. App. 2003); Farris v. State, 712 S.W.2d
512, 515-16 (Tex. Crim. App. 1986).
4
The Bankruptcy Code expressly states that the filing of a bankruptcy petition does not stay commencement or
continuation of a criminal action against the debtor. 11 U.S.C. § 362(b)(1) (2010); see Smith v. Millsap, 702 S.W.2d
741, 743 n.2 (Tex. App.—San Antonio 1985, no writ) (acknowledging section 362(b)(1)).
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As to Berry’s complaint concerning the amount of restitution ordered, we agree that
because the record shows that more than half of the thirty-two testifying victims were made
whole either by partial delivery of their orders or by repayment by the Budget Blinds
corporation, the amount of restitution must be reduced. 5 See Cabla, 6 S.W.3d at 545 (restitution
is intended to adequately compensate the victim of the offense in the course of punishing the
criminal offender); see also Campbell v. State, 5 S.W.3d 693, 696 (Tex. Crim. App. 1999)
(amount of restitution must be just and must have a factual basis within the loss of the victim);
Cartwright v. State, 605 S.W.2d 287, 289 (Tex. Crim. App. 1980). Because there is no evidence
to support the amounts of restitution ordered paid to those victims who have already been
compensated for their loss resulting from Berry’s offenses, the trial court abused its discretion by
including those amounts in its restitution order for $78,733.44. See Gonzalez, 954 S.W.2d at
104-105. Therefore, we reverse the portion of the judgment ordering restitution, and remand to
the trial court for recalculation of the appropriate amount of restitution. 6
CONCLUSION
Based on the foregoing reasons, we affirm Berry’s convictions but reverse the portion of
the judgment ordering restitution in the amount of $78,733.44, and remand to the trial court for
recalculation of the appropriate amount of restitution.
Phylis J. Speedlin, Justice
DO NOT PUBLISH
5
The State did not address this portion of Berry’s argument in its brief.
6
Due to discrepancies between the record and the judgment as to the particular amounts lost by each victim, we are
unable to calculate the appropriate amount of restitution and reform the judgment. See TEX. R. APP. P. 43.3.
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