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Fractured SCOW okays restitution order on top of civil settlement

State v. Ryan M. Muth, 2020 WI 65, reversing a per curiam court of appeals decision; case activity (including briefs)

Muth drove while intoxicated and caused the death of T.K. About a month later T.K.’s adult children reached a settlement with Muth’s insurer under which the children received the maximum payout under Muth’s policy as settlement for all claims against Muth. (¶3). Or so Muth thought. A majority of the supreme court holds that, because Muth was later convicted of homicide by intoxicated use of a vehicle, he can also be ordered to pay more money to the children as restitution under § 973.20.

This is a long decision (80+ pages) addressing three distinct issues. While there are majorities on specific results, there’s not much agreement on the reasons for those results. That means the application of the decision to future cases is not necessarily clear and may depend even more than usual on the facts. If you have a case where a defendant has also settled a related civil claim before sentencing, you will want to review this decision and see if gives you (or takes away) any arguments regarding the effect of the civil settlement on restitution. The rest of this post will provide a guide to the specific issues and briefly describe the splits in the justices’ approaches.

Accord and satisfaction: Muth claimed that under the doctrine of accord and satisfaction, the civil settlement with T.K.’s children provides an absolute defense against restitution–that is, restitution can’t be ordered at all because by entering into the settlement agreement T.K.’s children gave up all their claims against Muth in exchange for his policy limits. (¶33). Five justices reject this argument, Roggensack in the lead opinion (¶¶18-41), and Dallett, joined by A.W. Bradley, R.G. Bradley, and Ziegler, in the concurrence (¶¶72-78).

While there is a difference between the reasoning of the lead and concurring opinions on this point, the end result is the same: accord and satisfaction may mean that payments under a previous civil settlement reduce the amount of restitution (maybe even to zero, in theory), but it doesn’t preclude the criminal court from even entertaining a restitution request from the victim. So both the lead and concurrence accept that, despite § 973.20(14)(b)‘s explicit statement that a defendant may raise any defense available in a civil action, there is always restitution liability under § 973.20, and the defenses available in a civil case can do nothing more than function as set-offs to avoid double payments to the victim for the same loss. The reasoning of the lead opinion (Roggensack writing for herself alone) is that a defense in the civil context doesn’t work the same way under § 973.20 because restitution belongs to the state, not the victim, and so can’t be given up by a victim’s civil settlement. (¶¶18-31). The concurrence is briefer and more opaque, seemingly treating accord and satisfaction as equivalent to the doctrine of set-off, and mostly seems concerned that no one read State v. Walters, 224 Wis. 2d 897, 591 N.W.2d 874 (Ct. App. 1999), as precluding a defendant from asserting the “defense” (i.e., set-off) of accord and satisfaction. (¶¶72-78).

For what it’s worth, Kelly (¶¶89-106) and Hagedorn (¶¶110, 113-34) dissent on this point. They hold that accord and satisfactions is a total defense that precludes a restitution order from being entered, period, and they criticize the majority position as being unsupported by the text of § 973.20 and inconsistent with civil law on accord and satisfaction.

Proof of set-off: While a defense of accord and satisfaction (functioning strictly as a set-off) can be asserted, both the lead opinion (¶¶32-40) and the concurrence (¶¶74-75) hold the defendant must prove that the civil settlement specifically covered the special damages ordered as restitution, such that ordering restitution would result in double recovery to the victim. Muth didn’t do that. He provided a copy of the settlement agreement, but that generically listed all damages, general and special, without itemizing what amount was attributable to which loss.

In light of this ruling, in cases like Muth’s, where the defendant’s insurance company is covering the loss, it will behoove counsel to request the insurer either provide a copy of the itemized list of losses the victim is seeking or draft the civil settlement so that it specifies each loss the settlement is paying. Without information like that it will be difficult, if not impossible, to prove the defendant is entitled to a set-off. Note there is a majority in the concurrence (Dallett, joined by A.W. Bradley, R.G. Bradley, and Ziegler) for the proposition that the court can’t rely on extrinsic evidence about the parties’ subjective understanding of what the civil settlement covered. (¶76). The circuit court and the lead opinion considered just such evidence in concluding the civil settlement didn’t cover the items of loss covered by the restitution order. (¶¶5, 36).

Marital property law as a basis for restitution: Two of T.K.’s children claimed restitution for the lost wages of their spouses, not themselves, on the theory that the spouse’s lost wages caused a diminution of the marital estate and, therefore, a loss to the two children. (¶¶6, 10). The court of appeals rejected that reasoning (¶11). A majority of the supreme court reverses, though without a majority opinion for the rationale. Three justices (Roggensack, joined by Ziegler and Kelly) buy the victims’ marital property argument. (¶¶42-57, 88). Three other justices (Dallett, A.W. Bradley, and R.G. Bradley) reject the marital property basis for the spouses’ lost wages, but instead says the award was appropriate given the circuit court’s broad discretion under § 973.20(13)(a)5. (¶¶79-85).

Say what will you about the marital property argument, at least it’s going to be limited to claims about a crime’s effect on spouses; the concurrence’s reliance on “any other factors the court deems appropriate” is boundless, despite a disclaimer to the contrary. (¶85 n.7). Only one dissenting justice (Hagedorn) gives fealty to the statute itself, puts paid to both the marital property and boundless discretion rationales, and rejects the conclusion that the spouses’ lost wages were a proper item of restitution. (¶¶135-44).

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