United States v. Simpson-El

FILED
United States Court of Appeals
PUBLISH Tenth Circuit
UNITED STATES COURT OF APPEALS May 17, 2017
Elisabeth A. Shumaker
FOR THE TENTH CIRCUIT
Clerk of Court
UNITED STATES OF AMERICA,
Plaintiff-Appellee,
v. No. 16-3107
KAPPELLE SIMPSON-EL,
Defendant-Appellant.
_________________________________
Appeal from the United States District Court
for the District of Kansas
(D.C. No. 6:07-CR-10161-JMT-1)
_________________________________
David M. Magariel, Assistant Federal Public Defender (Melody Brannon,
Federal Public Defender, with him on the briefs), Office of the Federal
Public Defender, Kansas City, Kansas, for Appellant Kappelle Simpson-El.
Jared S. Maag, Assistant United States Attorney (Thomas E. Beall, Acting
United States Attorney, and Tanya Sue Wilson, Assistant United States
Attorney, on the brief), Office of the United States Attorney, District of
Kansas, Topeka, Kansas, for Appellee United States of America.
_________________________________
Before LUCERO and BACHARACH, Circuit Judges.*
*
The Honorable Neil Gorsuch participated in oral argument, but he is
not participating in the decision in light of his recent appointment to the
U.S. Supreme Court. The practice of our court permits the remaining two
panel judges, if in agreement, to act as a quorum in resolving the appeal.
See 28 U.S.C. § 46(d); see also United States v. Wiles, 106 F.3d 1516,
1516, at n* (10th Cir. 1997) (noting that this court allows remaining panel
_________________________________
BACHARACH, Circuit Judge.
_________________________________
This appeal involves a criminal defendant’s obligation to pay
restitution to the victims. A restitution payment schedule can be modified
when the defendant’s economic circumstances materially change. Here the
criminal defendant obtained a cash settlement growing out of a tort action
against the federal government. With this settlement, the district court had
to decide whether the defendant’s circumstances materially changed. The
district court answered “yes” and applied most of the settlement funds to
the restitution obligation. The defendant appeals, and we affirm.
1. The Restitution Order and the Settlement
The defendant owing restitution is Mr. Kapelle Simpson-El, who was
convicted of crimes involving the sale of stolen cars. His sentence included
a restitution obligation of $432,930.00. Since obtaining release, Mr.
Simpson-El has paid at least 5% of his gross monthly income toward
restitution.
Mr. Simpson-El was injured while serving his prison sentence at a
federal prison. The injury was allegedly exacerbated by inadequate medical
attention and a lack of treatment, leading Mr. Simpson-El to sue the
federal government under the Federal Tort Claims Act. After obtaining
judges to act as a quorum to resolve an appeal). In this case, the two
remaining panel members are in agreement.
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release from prison, Mr. Simpson-El settled with the government for
$200,000.
2. The District Court’s Ruling and Mr. Simpson-El’s Arguments
The government sought modification of the restitution order based on
a material change in economic circumstances, requesting an order for Mr.
Simpson-El to pay the entire $200,000 as restitution. The district court
granted the motion in part, applying $145,640 of the settlement funds
toward restitution. Mr. Simpson-El makes two arguments on appeal:
1. The district court erred in finding that the settlement funds
constituted a “material change in economic circumstances”
under 18 U.S.C. § 3664(k).
2. The district court improperly applied 18 U.S.C. § 3664(n).
We reject both arguments.
3. Standard of Review
Mr. Simpson-El contends that the standard is de novo review, and the
government urges us to apply the abuse-of-discretion standard. For the
sake of argument, we may assume that Mr. Simpson-El is right about the
standard. See United States v. Grant, 235 F.3d 95, 99 (2d Cir. 2000)
(stating that the court applies de novo review over “the legal question of
. . . what constitutes a ‘material change in the defendant’s economic
circumstances’ under section 3664(k)”). Under either de novo review or
review for an abuse of discretion, we would affirm.
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4. The district court did not err in finding that Mr. Simpson-El’s
settlement materially changed his economic circumstances.
Mr. Simpson-El argues that the district court erred substantively and
procedurally in finding a material change in economic circumstances.
Substantively, he contends that the settlement funds could not have
constituted a change in economic circumstances because the settlement was
intended to compensate for future income loss. Mr. Simpson-El also
contends that the district court procedurally erred by failing to compare his
current economic circumstances with his economic circumstances existing
at the time of the restitution order.
a. Mr. Simpson-El’s settlement constituted a material change
in his economic circumstances.
Under 18 U.S.C. § 3664(k), a court is authorized to adjust a
restitution order when there is a “material change in the defendant’s
economic circumstances that might affect the defendant’s ability to pay
restitution.” The district court invoked this authority, reasoning that the
receipt of settlement funds could affect Mr. Simpson-El’s ability to pay
restitution.
Mr. Simpson-El disagrees. His argument centers on the premise that
the settlement “attempts [only] to (in part at least) make up for a lifetime
of lost income.” Appellant’s Opening Br. at 14. This argument rests on a
questionable factual foundation, for the settlement might have included
some compensation for non-economic harm. After all, the settlement
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resolved a suit in which Mr. Simpson-El had claimed “hedonic damage to
his quality of life” as well as economic loss. R. vol. 1, at 98; see Hull ex
rel. Hull v. United States, 971 F.2d 1499, 1502 (10th Cir. 1992)
(differentiating between “economic losses” and “noneconomic losses” such
as “loss of enjoyment of life”). Thus, Mr. Simpson-El acknowledges that
 presumably some part of the settlement involved compensation
for lost quality of life 1 and
 collection of damages for lost quality of life could involve a
material change in economic circumstances.
Oral Arg. at 14:05-15:39.
Presumably not all of the settlement funds went toward “hedonic
damage,” for Mr. Simpson-El’s claim also sought recovery for losses in
future income. Even there, however, the district court could reasonably
view an immediate cash payment to Mr. Simpson-El as more valuable than
the opportunity to earn the same amount in the future.
For example, assume that without the alleged tort, Mr. Simpson-El
would have earned the same that he had earned before going to prison:
$37,000 per year. With this assumption, he would have had to wait over
five years to earn $200,000.
1
The settlement agreement is not in the appellate record. Thus, we
lack any evidence about possible designation of funds in the settlement
agreement as payment for particular claims.
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Now, assume that he suffered a loss in earning capacity because of
the tort. Mr. Simpson-El testified that after his injury, he would earn
$16,000 for one year. This projection would have entailed a loss of roughly
57% from what he had earned before going to prison. Let’s assume that the
sole cause of this reduction was the tort underlying the eventual
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settlement. With an annual loss in earning capacity, Mr. Simpson-El would
have to wait 12 ½ years to earn $200,000.
With the settlement, Mr. Simpson-El obtains the entire $200,000
now, without having to wait more than 5 years (without the tort) or 12 ½
years (with the tort). Without the settlement, Mr. Simpson-El would
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theoretically have earned the same amount. But with the settlement, he no
longer has to wait for the money. That time-savings could reasonably be
viewed as a material change in economic circumstances. See United States
v. Grant, 235 F.3d 95, 100-01 (2d Cir. 2000) (holding that newly created
access to previously owned funds constitutes a material change in
economic circumstances under 18 U.S.C. § 3664(k)); see also United States
v. Grigsby, 579 F. App’x 680, 684 (10th Cir. 2014) (defining a “‘material
change in the defendant’s economic circumstances’” as “a bona fide
positive or negative change in the defendant’s financial circumstances that
affects his ability to pay restitution”).
Mr. Simpson-El likens his circumstances to those in United States v.
Grant, 715 F.3d 552 (4th Cir. 2013). The district court in Grant modified a
restitution order by requiring the defendant to apply all of his income tax
refunds toward restitution, without considering whether those refunds
constituted a material change under § 3664(k). Id. at 555-56. The Fourth
Circuit reversed, concluding that the district court had not considered
whether the defendant’s circumstances materially changed after sentencing.
Id. at 557, 559.
Mr. Simpson-El’s circumstances differ from those in Grant. Here, the
district court considered Mr. Simpson-El’s current economic condition and
factored it into the distribution of the settlement. In addition, the income
tax refunds in Grant were consistent annual payments that had preceded
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the restitution order. Id. at 557. Mr. Simpson-El’s settlement is different.
It was a one-time event that took place after the creation of the restitution
schedule. 2
b. The district court provided an adequate explanation.
Mr. Simpson-El contends that the district court did not properly
apply 18 U.S.C. § 3664(k). According to Mr. Simpson-El, the district court
failed to compare the economic circumstances before and after sentencing.
Mr. Simpson-El points to a specific comment by the district court: “[I]t is
clear that [Mr. Simpson-El’s] economic circumstances have changed
materially with the settlement, as there is a substantial new fund from
which the defendant could pay restitution.” R. vol. 1, at 110. Mr. Simpson-
El claims that the lack of explanation taints the decision.
The explanation was adequate, for it compared the economic
circumstances before and after the sentencing. In this comparison, the
court discussed (1) the allegations of loss of future income within the civil
case and (2) the current employment and income level of the defendant.
2
According to Mr. Simpson-El, the district court’s ruling would treat
all personal injury settlements as material changes in economic
circumstances. We decide only the issue before us. Section 3664(k)
requires a court to find a material change in Mr. Simpson-El’s ability to
pay restitution. In this case, the district court could reasonably find that
the $200,000 settlement payment had affected Mr. Simpson-El’s ability to
pay his restitution obligation more quickly. Id. at 557, 559. We need not
decide whether personal injury settlements would always allow quicker
payment of restitution obligations.
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Based on these considerations, the district court concluded that the
defendant remained able to meet his needs without dipping into the
settlement proceeds.
The district court did not illustrate how Mr. Simpson-El’s economic
circumstances had changed, but there was no need to do so. The court
stated the obvious: that there was now a substantial new fund that had not
existed before the time of the settlement. Pointing to the newly created
fund, the court relied on a readily apparent change: Before the settlement,
Mr. Simpson-El would have had to wait years to earn $200,000; after the
settlement, he would immediately recoup $200,000. With the newly created
access to $200,000, the district court’s simple explanation was adequate to
inform the parties why the settlement would constitute a material change in
economic circumstances. See United States v. Ahidley, 486 F.3d 1184, 1191
(10th Cir. 2007) (stating that when we review the explanations for the
initial payment schedule, the standard is whether we can discern from the
record that the district court considered the appropriate factors).
5. The district court did not rely on § 3664(n).
Mr. Simpson-El argues that the district court erred in relying on
§ 3664(n). Section 3664(n) requires application of settlement funds to a
prisoner’s restitution obligations. Because Mr. Simpson-El received the
settlement funds when he was no longer a prisoner, § 3664(n) did not
apply.
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The district court mentioned § 3664(n), but did not rely on it.
Instead, the district court contrasted Mr. Simpson-El’s situation with that
of a prisoner, who would be subject to § 3664(n). The district court
expressly rejected use of § 3664(n) as the legal standard for Mr. Simpson-
El’s action, saying that “[Section 3664(n)] does not apply because [Mr.
Simpson-El] was not incarcerated when he received the settlement . . . .”
R. vol. 1, at 112. 3 The district court did not err in mentioning § 3664(n).
6. Conclusion
Because the district court properly applied § 3664, we affirm.
3
Mr. Simpson-El acknowledges that “the district court pointed out that
§ 3664(n) did not apply.” Appellant’s Opening Br. at 18.
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