Andrew McMichael v. Commonwealth of Kentucky

RENDERED: MARCH 19, 2021; 10:00 A.M.
TO BE PUBLISHED
Commonwealth of Kentucky
Court of Appeals
NO. 2020-CA-0515-MR
ANDREW MCMICHAEL APPELLANT
APPEAL FROM JEFFERSON CIRCUIT COURT
v. HONORABLE AUDRA J. ECKERLE, JUDGE
ACTION NO. 19-CR-000882-002
COMMONWEALTH OF KENTUCKY APPELLEE
OPINION
REVERSING AND REMANDING
** ** ** ** **
BEFORE: ACREE, DIXON, AND K. THOMPSON, JUDGES.
DIXON, JUDGE: Andrew McMichael appeals the order of restitution entered by
the Jefferson Circuit Court on March 10, 2020. After careful review of the record,
briefs, and law, we reverse and remand.
On October 22, 2019, McMichael pled guilty to theft by unlawful
taking over $500 but less than $10,0001 for removing and scrapping some stainless
1
Kentucky Revised Statutes (KRS) 514.030(2)(d), a Class D felony.
steel siding from a 1952 Mountain View modular diner owned by Moseley
Putney.2 The scrapping of the stainless steel netted approximately $150, which
was split amongst McMichael, his codefendant, and perhaps another party not
prosecuted in this action.3 As part of the plea agreement, McMichael agreed to pay
restitution in an amount to be determined by the trial court.
On March 9, 2020, a restitution hearing was held. Putney, the sole
witness for the Commonwealth, testified that he bought the diner in 1991 for
approximately $25,000. At the time of purchase, the diner was in need of
restoration, including repairs to its roof and one end, and it did not include a
kitchen. After purchase, Putney simply moved the diner—twice—with its final
destination being a storage site where it was exposed to the elements for over 15
years. Putney visited the storage site every few years to weed-eat, cut back trees,
take pictures, and generally inventory the diner. Prior to discovering the theft of its
siding, it had been 18 to 24 months since Putney had visited the diner. Putney
produced no photos from his last visit prior to the vandalism but, rather, one photo
of the diner’s good side which he believed to be taken five to ten years before
removal of the siding. He also produced two photos of the diner taken after the
2
He is also referred to as “Mose” and “Moses” Putney in the proceedings below.
3
McMichael’s codefendant offered testimony at the restitution hearing about the involvement of
another man he knew only as “Junebug” who may have also shared in the profits.
-2-
siding removal, which showed much of the siding still intact (though not in pristine
condition), and two photos of the siding found at the salvage yard.
The foregoing notwithstanding, Putney believed he could have sold
the diner before the siding was removed for $30,000 to $60,000. He also believed
the diner could generate three million dollars or more once fully restored and
operational. Nonetheless, Putney never insured the diner or procured an insurer’s
estimation as to its value. Putney acknowledged the stainless steel siding removed
by McMichael had a low salvage value but claimed it had a much higher fair
market and/or replacement value due to its “custom” bending and the forming of
the metal which made it “unique.” Putney further acknowledged much, if not all,
of the siding was recovered; however, he testified it was damaged and unusable.
Putney testified he had consulted Merrick Kemper, a local sheet metal and roofing
contractor, and obtained two repair estimates, which were entered as exhibits.4
The first estimate for a partial repair was $62,493, while the second estimate for a
more complete repair was $221,800.
On cross-examination, Putney denied telling police the diner was
worth only $3,000, the amount cited in the criminal complaint. Putney explained
that amount only estimated the salvage value of the steel taken, not the value of the
4
McMichael objected to the admission of these estimates as exhibits since he did not have the
opportunity to cross-examine their author. His objection was overruled by the trial court.
-3-
diner itself. He also testified that he had no idea what the salvage value of the
stainless steel was but thought it would have been higher. Putney conceded he had
no records regarding the purchase of the diner, nor did he have documentation to
support his estimates that the sale value of the diner before the siding was removed
was between $30,000 and $60,000 or that the diner could generate millions of
dollars once fully restored and operational.
McMichael requested restitution be set at either the amount for which
the stainless steel was scrapped (approximately $150) or the amount set forth in the
initial complaint ($3,000). McMichael argued the Commonwealth had not met its
burden of proof to establish higher restitution where Putney’s testimony conflicted
with the initial complaint, which was never amended and was not supported by
documentation. McMichael further argued the diner was not worth the amount
Putney asserted because it had been sitting in the woods since the 1990s and was in
need of extensive restoration before the siding was removed. The Commonwealth
disagreed, asserting Putney was competent to testify and his testimony was
supported by repair estimates from a company specializing in metal work. The
Commonwealth asked the court to set restitution at $62,493, the amount necessary
to repair the damage caused by the theft. The trial court agreed and ordered
McMichael to pay $62,493 in restitution. This appeal followed. Additional facts
will be introduced as they become relevant.
-4-
On appeal, a trial court’s finding as to the amount of restitution will
not be set aside unless it is clearly erroneous, i.e., unsupported by substantial
evidence. Jones v. Commonwealth, 382 S.W.3d 22, 32 (Ky. 2011); Mitchell v.
Commonwealth, 538 S.W.3d 326, 329 (Ky. App. 2017). “Substantial evidence is
evidence which, when taken alone or in light of all the evidence, has sufficient
probative value to induce conviction in the mind of a reasonable person.” Mitchell,
538 S.W.3d at 329.
McMichael has appealed the sum of restitution as determined by the
trial court. He makes three arguments why the trial court erred by setting a
restitution amount in excess of $62,000: (1) the Commonwealth failed to present
any evidence having even a minimum indicium of reliability that the diner or its
metal siding was worth more than the $3,000 noted in the criminal complaint; (2)
the court’s finding that the diner and its siding had a higher value was ambiguous;
and (3) the diner and its siding had little to no value on the fair market.
We begin by noting restitution to the victim herein is required by
statute since McMichael pled guilty to a Class D felony offense. KRS
532.356(1)(b).5 Pursuant to KRS 532.350(1)(a), restitution is rather vaguely
5
The text of the statute states in relevant part,
(1) Upon a person’s conviction and sentencing for any . . . Class D
felony offense, . . . the court shall impose the following sanctions
in addition to any imprisonment, fine, court cost, or community
service:
-5-
defined as “any form of compensation paid by a convicted person to a victim for
. . . property damage . . . because of a criminal act[.]” Unless the amount of
restitution is agreed upon by the parties, constitutional due process requires a trial
court to conduct an adversarial hearing for the purpose of determining a restitution
amount. Jones, 382 S.W.3d 22. At this hearing, the Commonwealth bears the
burden of establishing the validity of the restitution claim and the amount of
restitution by a preponderance of the evidence. Id. at 32. Formerly, under KRS
431.200, juries were required to determine the restitution amount.6 However, after
the enactment of KRS 532.032, restitution determinations are made by the trial
court and not by jury when this statute is applicable. See Brown v. Commonwealth,
540 S.W.3d 374 (Ky. 2018); Fields v. Commonwealth, 123 S.W.3d 914, 916 (Ky.
App. 2003), as modified (Nov. 26, 2003).7 Moreover, trial courts are vested with
...
(b) Restitution to the crime victim as set out in KRS
439.563, 532.032, and 532.033.
6
Pursuant to KRS 431.200, “[a]ny person convicted of a misdemeanor or felony for taking,
injuring or destroying property shall restore the property or make reparation in damages if not
ordered as a condition of probation.”
7
According to Fields:
The mandate of this statute applies regardless of whether the
convicted defendant is to be incarcerated or conditionally
released. We agree with the Commonwealth that under this statute
restitution must now be considered during sentencing in all
appropriate cases, and therefore that the General Assembly
contemplated ordinary sentencing procedures as the foundation for
-6-
“broad discretion . . . to resolve [restitution] matter[s] in a way that respects the
constitutional rights of all the parties and that achieves substantial justice.” Jones,
382 S.W.3d at 31.
Unfortunately, Kentucky’s restitution statutes give little guidance on
how the amount of restitution is to be determined. Moreover, few published
opinions have set out any methodology to follow in determining equitable
restitution orders. Nevertheless, in most theft cases, determining the value of the
thing stolen is a rather easy endeavor. For example, in Mitchell, the victim’s
testimony as to the value of items stolen, based on the prices for the same items
listed on Amazon.com, was deemed sufficient to support the trial court’s
determination as to the amount of restitution. Mitchell, 538 S.W.3d at 328, 330.
However, herein, apparently 1950s era modular diner stainless steel siding is one
of the few things Amazon.com fails to offer for sale. Furthermore, Putney offered
no testimony of any research—online or otherwise—conducted to verify his
estimates of the diner or the value of its siding.
restitutionary sentences, not the jury procedure referred to in KRS
431.200. In the cases where KRS 431.200 applies, that statute
continues to provide an alternative procedure for a post-sentencing
restitution order, but KRS 532.032 (and the statutes incorporated
therein) is now the generally applicable criminal restitution statute.
123 S.W.3d at 916 (internal footnote omitted).
-7-
The uncontroverted evidence offered by the Commonwealth at the
hearing established Putney purchased the diner in 1991 for approximately $25,000
in a significant state of disrepair. After the purchase, Putney had done nothing
more than move the diner a couple of times, leaving it at an outdoor storage lot for
over 15 years unprotected from the weather. Certainly, nothing had been done to
increase its value. McMichael testified he shared the $150 from the sale of the
stainless steel. The only shred of evidence presented by the Commonwealth as to
the value of the metal came through an estimate to replace the sheet metal on the
unusable diner for over $62,000—more than double what Putney paid in 1991 for
the entire diner! Surely the adage “crime doesn’t pay” is a vast understatement
when applied to McMichael.
Even so, appellate courts in Kentucky have established few procedural
guides for restitution determinations. Significantly, the courts have recognized a
criminal defendant’s right to due process in the establishment of a restitution
amount. Fields, 123 S.W.3d 914; Wiley v. Commonwealth, 348 S.W.3d 570, 575
(Ky. 2010); Jones, 382 S.W.3d 22. Additionally, restitution awards must be based
on reliable facts. Id. As noted in Wiley, and applied to restitution proceedings,
“although a lower standard of due process applies at sentencing, the facts relied on
by the court must ‘have some minimal indicium of reliability beyond mere
allegation.’” Wiley, 348 S.W.3d at 575 (quoting Fields, 123 S.W.3d at 917).
-8-
Kentucky courts have addressed the establishment of value of stolen
property in the context of determining the proper crime charged. In Allen v.
Commonwealth, 148 Ky. 327, 146 S.W. 762 (1912), the Court observed:
In cases like this, where the degree of the offense
depends upon the value of the property, it often happens
that the witnesses will differ as to its value; and, when
there is a difference of opinion as to this matter, it is for
the jury to form their own conclusion from the evidence
as to the value of the property stolen. Evidence of the
cost price of an article is not conclusive as to its value;
nor, indeed, is evidence as to its selling price. The test
by which the degree of guilt of the accused is to be
determined is the value of the article at the time it was
stolen, and this value is to be arrived at by the jury from a
consideration of all the facts and circumstances shown in
the evidence. Where the article stolen is in general use,
and has what might be called a standard market value, of
course the best evidence of the value of such an article is
the price at which it sells in the open market. But where
the article does not appear to have a standard value in the
open market, or its standard value is not shown, the
evidence of its value must be arrived at from facts and
circumstances testified to by witnesses who qualify
themselves to speak as to its value.
Id. at 762-63 (emphasis added). Here, the question of the stainless steel’s value is
not needed to determine the degree of the offense, as that had already been agreed
upon; rather, the determination of its value goes to the issue of restitution. Since
the stainless steel at issue herein does not appear to have a standard value in the
open market, and its standard value was not shown, the evidence of its value must
be determined from facts and circumstances testified to by a witness who qualifies
-9-
himself to speak to its value. The sole witness for the Commonwealth was the
diner’s owner, Putney; no evidence of his qualifications to testify as to the diner’s
worth, beyond merely being its owner, was presented.
As previously noted, in Fields, we held that “[t]he due-process
clauses of the federal constitution require that sentences not be imposed on the
basis of material misinformation, and that facts relied on by the sentencing court
have some minimal indicium of reliability beyond mere allegation.” Fields, 123
S.W.3d at 917 (emphasis added) (internal quotation marks and footnotes omitted).
Following Fields, in Wiley, our Supreme Court further held that “the record must
establish a factual predicate for the restitution order.” Wiley, 348 S.W.3d at 575.
“In the ordinary case, the proper yardstick is the market value of the
property at the time and place of the larceny; the original cost of the property or
any special value to the owner personally is not considered.” 3 CHARLES E.
TORCIA, GRADES OF LARCENY—DETERMINATION OF VALUE, WHARTON’S
CRIMINAL LAW § 345 (15th ed. 2020) (footnotes omitted).8 Herein, Putney offered
8
52B Corpus Juris Secundum (C.J.S.) Larceny § 81 (2021) provides:
In the absence of statutes providing otherwise, the measure of
the value of a subject of larceny is its fair market value at the
time and place where the alleged crime has been committed. If
an article does not have a market value, its actual value must
be determined from a consideration of all the facts and
circumstances in evidence.
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nothing more than his mere opinion of the worth of both the metal and the diner.
There was no evidence of the current value of the diner or of the stainless steel at
the time it was taken. This is simply insufficiently detailed or reliable to establish
a fair restitution computation; due process requires more.
Regrettably, Kentucky courts have not found a specific formula as an
appropriate method to determine an equitable sum when setting restitution, which
is by its very nature not an exact science. See United States v. Diamond, 969 F.2d
961, 965 (10th Cir. 1992). They have, however, recognized that using certain
Unless otherwise provided by statute, the “value” of the stolen
property means its market value, or fair market value, or
reasonable selling price, at the time and place of the theft. The
place that determines the market value of stolen property for the
purpose of fixing the degree of larceny is necessarily somewhat
flexible and uncertain in extent.
Market value has been defined as the price at which a willing seller
and a willing buyer will trade or price actually charged and
received by the merchant in usual, customary sale of the goods
stolen. Any evidence bearing on the question of fair market value
may properly be considered.
Where an item that was stolen has no market value, its actual value
must be shown in order to determine the grade of the offense. In
such a case, the article’s actual value must be determined from a
consideration of all the facts and circumstances in evidence,
including the testimony of witnesses who qualify themselves to
testify as to its value. Value may not be determined solely by its
worth to the owner or its original cost. However, cost, together
with other proof, may afford the basis for a valid finding as to
value. In addition, replacement value may be determinative where
the property has no cash market value, or such value cannot be
ascertained.
-11-
valuation methods of property stolen or damaged may not always be reliable when
based on conjecture and speculation. In Kentucky Utilities Company v.
Consolidated Telephone Company, 252 S.W.2d 437 (Ky. 1952), Kentucky’s
highest Court refused to use market value to measure damages to a telephone line
because “[i]n ordinary circumstances a portion of a telephone system would not be
marketable as such” and thus “any estimate of the market value of a portion of a
telephone system would be conjectural[.]” Id. at 441. It is well established that an
award of restitution may not be based on mere speculation. Fields, 123 S.W.3d
914; Wiley, 348 S.W.3d at 575; Jones, 382 S.W.3d 22. Thus, both the facts and the
method for determining restitution should be reliable.
To determine the proper method to employ when setting restitution,
we must look to the legislature’s intent and purpose behind its statutes governing
same. The Supreme Court in Commonwealth v. Bailey, 721 S.W.2d 706, 707 (Ky.
1986), observed the purpose of restitution as follows:
We also do not feel this is additional punishment exacted
by the criminal justice system. It is neither imprisonment
as envisioned by KRS Chapter 532, nor fine as set out
in KRS Chapter 534. It is merely a system designed to
restore property or the value thereof to the victim. It is
not punishment to make the criminal give back
something which was never his and which was obtained
by him only by commission of a crime.
(emphasis added). Surely, restitution contemplated by our statutes cannot require
payment of a sum equal to more than double what a victim paid for an entire diner
-12-
just because replacement of its siding would cost an exorbitant amount. To do so
would not restore only what was lost but would amount to a windfall for Putney.
The legislative purposes behind restitution include “deterrence and
rehabilitation as well as making the victim whole.” Hearn v. Commonwealth, 80
S.W.3d 432, 436 (Ky. 2002). Under Kentucky law, the aim of restitution is the
same as that of compensatory damages, which “is to make the injured party whole
to the extent that is possible to measure his injury in terms of money. The object is
not to place the plaintiff in a better position than he would have been had the
wrong not been done.” Kentucky Cent. Ins. Co. v. Schneider, 15 S.W.3d 373, 374-
75 (Ky. 2000) (citations omitted). Moreover, it is well established that an “injured
party may not make a profit” out of an injury to his property. Reed v. Mercer Cty.
Fiscal Court, 220 Ky. 646, 295 S.W. 995, 996 (1927). Overall, “[t]he complete
idea at the bottom of the matter of allowing damages is to compensate the owner in
money for that of which he was wrongfully deprived.” Manning v. Grinstead, 121
Ky. 802, 90 S.W. 553, 555 (1906).
Here, the trial court’s measure of damages offends the most general
principles of damages law. Putney purchased the diner in 1991 for approximately
$25,000. Although some items increase in value over time, given the facts of this
case—that the diner was inoperable at the time of purchase, was left uninsured in a
storage field exposed to the elements to further deteriorate, and Putney was unable
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to sell it or find a partner for his business venture—the Commonwealth has failed
to meet its burden of proving that is the case here. An award of $62,493 to Putney
in restitution would clearly create a windfall in his favor at McMichael’s detriment.
Any such measure of damages would go far beyond compensating Putney for that
of which he was wrongfully deprived and would clearly operate as a windfall
profit. Accordingly, it was clear error for the trial court to award an amount of
restitution that created such a windfall for Putney.9
With the legislature’s purpose behind restitution firmly in mind, we
again turn to the issue of determining a proper method for setting restitution.
McMichael argues the trial court erred when it failed to determine whether it was
reasonable to repair the diner after weighing the decrease in its value versus the
cost of repair. There is an inexplicable dearth of published criminal case law on
the issue of reasonableness of repair costs and what amounts to excessive
restitution. Nevertheless, in Mitchell, another panel of our Court discussed a
somewhat similar situation. In that case:
[the victim] testified that stolen televisions were
recovered but one was damaged. The estimated repair
9
See Level 3 Commc’ns, LLC v. TNT Constr., Inc., 220 F. Supp. 3d 812 (W.D. Ky. 2016). See
also United States v. Howard, 784 F.3d 745, 750 (10th Cir. 2015) (internal quotation marks and
citation omitted) (A restitution award “must not unjustly enrich crime victims or provide them a
windfall.”); United States v. Zander, 794 F.3d 1220, 1233 (10th Cir. 2015); United States v.
Boccagna, 450 F.3d 107, 121 (2d Cir. 2006); United States v. Arutunoff, 1 F.3d 1112, 1121 (10th
Cir. 1993); United States v. Stanley, 309 F.3d 611, 613 (9th Cir. 2002). Although these cases
discuss the federal Mandatory Victims Restitution Act (MVRA), 18 United States Code
Annotated § 3663A, the same principle applies here.
-14-
value for the damaged television was $650 and the
replacement value was $400. . . . The $250 difference
between the repair cost and the replacement value of the
damaged television was deducted from the restitution
sought . . . .
538 S.W.3d at 328. Likewise, herein, the difference between the estimated repair
and the replacement value should be disallowed and deducted from the restitution
amount.
Considering the absence of further relevant criminal case law on this
issue, we must also compare the case herein to principles espoused in areas of civil
law. In tort law, it is generally accepted that “repair is unreasonable when its cost
exceeds the difference in the before and after values.” Newsome v. Billips, 671
S.W.2d 252, 255 (Ky. App. 1984). Why, then, should we demand a different
outcome in criminal cases?
In Newsome, another panel of our Court discussed this principle found
in the law of torts, stating:
We are dealing with recovery for a tort and not an
insurance contract which might allow for some costly
restoration. The tort-feasor is responsible for the lesser
of the cost to cure and the diminished value. The
Restatement of Torts is generally consistent. It provides:
If one is entitled to a judgment for harm to land
resulting from a past invasion and not amounting
to a total destruction of value, the damages include
compensation for
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(a) the difference between the value of the land
before the harm and the value after the harm, or at
his election in an appropriate case, the cost of
restoration that has been or may be reasonably
incurred,
(b) the loss of use of the land, and
(c) discomfort and annoyance to him as an
occupant.
Restatement (Second) of Torts, § 929, at 544 (1977). The
option for restoration is nevertheless limited by what is
“reasonable.”
An example of a situation with possible high cost and
low loss might be a house with aluminum siding which
gets some dents from flying rocks due to blasting. A
substantial cost might be required to remove the dents,
but the diminished value might be very little. The loss
would be especially small, if the siding already had
several dents from other causes.
We conclude that the instruction was a correct statement
of the law, and that it was properly applied to the facts as
they were proven at trial. The instruction was based on
[Edwards & Webb Constr. Co. v. Duff, 554 S.W.2d 909
(Ky. App. 1977)]. That case involved a total loss, but it
also prevented the repair cost from exceeding the loss in
value.
The law is clear enough. The problem in this case is with
the proof and the development of the facts. The
estimated cost to repair ranged from $600.00 to
$12,500.00. The loss in value was essentially fixed at
$800.00. The jury could have awarded damages between
$600.00 and $800.00. The verdict of $800.00 was proper
whether it was based on the jury’s determination of a cost
to repair or the actual loss in value as was proven.
-16-
Id. (emphasis added). The case herein is faced with a similar problem of proof and
fact development. Here, there is a wide range of estimated cost of repair, as well
as uncertainty regarding the loss of value which should act as a cap on the amount
of restitution. That cap should be determined before awarding repair costs, which
are unreasonable per se if they exceed that amount.
In another tort case discussing caps on recovery, Ellison v. R & B
Contracting, Inc., 32 S.W.3d 66 (Ky. 2000), the Court held:
Questions regarding the cost of repairing a particular
injury to real estate and the extent of any diminution in
fair market value of the real estate as a result of an injury
are questions of fact. Accordingly, we hold that in future
cases where a claimant seeks compensation in the form of
repair costs for an injury to land, trial courts shall
require the jury to find whether the injury may be
repaired at a cost less than the diminution in the value of
the property, and, if the jury finds otherwise, limit the
claimant’s recovery to the diminution in the value of the
property. The following sample damages instruction
taken almost verbatim from J. Palmore and R. Eads,
Kentucky Instructions to Juries, § 39.12 (Anderson
Publishing Co.1989) accomplishes this purpose:
INSTRUCTION NO. ______
If you find for P you will determine from the
evidence and award [P] the lesser of the following
two amounts:
(A) the reasonable cost of restoring [P’s] property
to substantially the same condition as immediately
before it was damaged by [ ].
OR
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(B) the difference between the fair market value of
[P’s] entire property immediately before and
immediately after the property was damaged, not
to exceed ______.
“Fair market value” is the price that a person who
is willing but not compelled to buy would pay and
a seller who is willing but not forced to sell would
accept for the property in question.
Id. at 70-71 (some emphasis added) (footnote omitted). Again, here, there is no
evidence of the amount of diminution in the value of Putney’s property. The
difference in the value of the diner immediately preceding and following the
removal of its siding should be determined and serve as a cap on the amount of
restitution.
We also find 25 C.J.S. Damages § 152 (2021) instructive. It states,
the “measure of damages for injury to, or destruction of, buildings or other
structures is the amount of the loss, which may be the difference in the value of the
realty before and after the injury, the value of the building or structure, or, where
practicable, the cost of restoration.” (Emphasis added.) It further provides:
The measure of damages may be the cost of restoration or
repair where the building or other structure can be
restored to substantially the condition it was in prior to
the injury, at least where such cost is less than the
diminution in the value of the structure or is less than its
value before the damage was inflicted. Defendant is not
required to pay for a new and modern structure,
disregarding the obsolescent condition of the structure
when damaged. To the cost of restoration may be added,
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in a proper case, the loss of rental, or of use, or
diminution in the value of the use of the property, during
the time required for repairs, with a deduction, if such be
the case, for the cost of restoring the property with new
material more valuable than that destroyed.
Lack of market value.
Where a building is without market value, its real or
ordinary cash value is to be obtained from a
consideration of other factors, such as its cost, the uses to
which it has been put, and its age, condition, and
location. The price at which the owner has contracted to
sell it is not controlling.
(Some emphasis added) (footnotes omitted).10
10
Under the “lesser than” measure of damages for a negligently damaged building, the owner is
entitled to recover the entire cost of restoring the damaged building to its former condition unless
such cost exceeds its diminution in value as the result of the injury, in which event the recovery
must be limited to the amount of such diminution.
These legal principles are widely accepted in jurisdictions throughout the United States. See
Brooklyn Waterfront Terminal Corp. v. Int’l Terminal Operating Co., 211 F. Supp. 702 (S.D.
N.Y. 1962), order aff’d, 311 F.2d 221 (2d Cir. 1962); T.H. Browning S.S. Co. v. F.H. Peavey &
Co., 235 F.2d 5 (8th Cir. 1956); Russell v. United States, 113 F. Supp. 353 (M.D. Pa. 1953); City
of Globe v. Rabogliatti, 24 Ariz. 392, 210 P. 685 (1922); S. Ry. Co. v. Wooten, 110 Ga. App. 6,
137 S.E.2d 696 (1964); Britven v. Occidental Ins. Co., San Francisco, Cal., 234 Iowa 682, 13
N.W.2d 791 (1944); Bus. Realty, Inc. v. Noah’s Dove Lodge No. 20, 375 S.W.2d 389 (Ky. 1963);
Price Bros. v. City of Dawson Springs, 190 Ky. 349, 227 S.W. 470 (1921); States Corp. v. Shull,
216 Ky. 57, 287 S.W. 210 (1926); Prestonsburg Superior Oil Gas Co. v. Vance, 215 Ky. 77, 284
S.W. 405 (1926); Reisz v. Kansas City S. R. Co., 148 La. 929, 88 So. 120 (1921); Ziegler v.
Predmore, 341 Mich. 639, 68 N.W.2d 130 (1955); Fite v. N. River Ins. Co., 199 Mich. 467, 165
N.W. 705 (1917); Long v. Magnolia Hotel Co., 236 Miss. 655, 111 So. 2d 645 (1959),
suggestion of error sustained on other grounds, 236 Miss. 655, 114 So. 2d 667 (1959); Snider v.
Town of Silver City, 56 N.M. 603, 247 P.2d 178 (1952); Ferreri v. Dworman Assocs., Inc., 34
Misc. 2d 1053, 231 N.Y.S.2d 399 (Sup. Ct. 1962); Zaras v. City of Findlay, 112 Ohio App. 367,
16 Ohio Op. 2d 306, 176 N.E.2d 451 (1960); Dussell v. Kaufman Const. Co., 398 Pa. 369, 157
A.2d 740, 79 A.L.R. 2d 957 (1960); Thompson v. King Feed & Nutrition Serv., Inc., 153 Wash.
2d 447, 105 P.3d 378 (2005).
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The common theme is: pre- and post-incident values must be
established and their difference serve as a cap on recovery. Here, little or no effort
was made to establish pre- or post-theft values of the diner or its siding, much less
calculate their difference to serve as a cap on restitution. We believe these values
must be determined, and the cap applied, to set restitution which comports with its
intent in order to obtain substantial justice.
Yet another consideration the trial court must apply when calculating
restitution is the value of the recovered siding. Although Putney testified the
siding was “worthless,” presumably when it came to re-attaching it for use on the
diner’s exterior, it undoubtedly had some value, even if only as scrap metal.
McMichael is entitled to an offset against his restitution by the value of the
recovered siding. Cases reviewing restitution under federal law are instructive on
this principle. “[T]he determination of the amount of loss must account for any
benefit received by the victim.” United States v. Guthrie, 64 F.3d 1510, 1516
(10th Cir. 1995). “Amounts a victim receives that reduce the loss are not to be
included in the restitution amount[.]” United States v. Scott, 74 F.3d 107, 110 (6th
Cir. 1996). Consequently, the value of the returned siding must be established and
deducted from the amount of otherwise allowable restitution.
As a final note, we sua sponte point out another serious flaw with the
trial court’s restitution order. Contrary to KRS 532.033, the trial court’s order did
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not provide to whom restitution payments should be made, how much the
payments should be, or when they should be made. These are required for a valid,
binding, and enforceable restitution order. See Rollins v. Commonwealth, 294
S.W.3d 463, 465 (Ky. App. 2009). This restitution order must also comply with
this statute.
CONCLUSION
Therefore, and for the foregoing reasons, the order of restitution of the
Jefferson Circuit Court is REVERSED and REMANDED to the trial court for
further proceedings consistent with this Opinion.
ALL CONCUR.
BRIEFS FOR APPELLANT: BRIEF FOR APPELLEE:
Christopher B. Thurman Daniel Cameron
Louisville, Kentucky Attorney General of Kentucky
Kristin L. Conder
Assistant Attorney General
Frankfort, Kentucky
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