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Restitution: Insurance-Related, Difference between Appraised Value and Salvage-Auction Price

State v. Cody A. Gibson, 2012 WI App 103 (recommended for publication); case activity

Restitution order to reimburse insurance company and owner for insurance deductible, in relation to losses arising from stolen auto, upheld. The company (Acuity) paid the owners $11,113 the same day the car was stolen, but the car was recovered with very little damage the very next day. The car was appraised at $10,379 and Acuity turned it over to a salvage company, which took the car to auction where it returned only $6292. Acuity therefore sought, and obtained, the difference between payout and sale – $4820 – via restitution order. Gibson’s argued that Acuity’s loss was not caused by him but, rather, the company’s handling of the claim. The trial court found that “Acuity’s actions were consistent with its normal business practices,” and that the sale by a salvage company was “standard and customary.” The court of appeals now affirms.

Restitution to an insurer is authorized under § 973.20(5)(d) “(i)f justice so requires,” and the loss is “otherwise compensable under this section.” The court rejects Gibson’s argument that the loss wasn’t compensable because the car was recovered:

¶13      Wisconsin Stat. § 973.20(2)(a) permits a circuit court at sentencing to order return of property to the owner; however, if such return is impossible, impractical or inadequate, the court may order repair or replacement under §973.20(2)(b).  Here, the option to order return of the vehicle was no longer available at sentencing.  Moreover, when the vehicle was recovered, the victim had been compensated by Acuity, and the circumstances made return of the vehicle at that time impractical.  Thus, the court did not err in declining to impose an after-the-fact return requirement upon Acuity’ restitution claim.  In so concluding, we note that this court has previously rejected the contention that the eventual recovery of stolen property satisfies the defendant’s restitution obligation, instead holding that § 973.20 permits the circuit court to fashion restitution to fit the crime and make the victim whole.  See State v. Boffer, 158 Wis. 2d 655, 661-62, 462 N.W.2d 906 (Ct. App. 1990) (“The statute is obviously drafted to fit neatly into the court’s sentencing discretion.”).  This includes the discretion to select between any number of reasonable approaches to restitution—whether it be the return of the property or paying the repair or replacement cost.  See id.

¶14      Here, the undisputed fact remains that Gibson stole the Poolers’ vehicle.  The losses suffered by the Poolers—both in the loss of the vehicle and in the payment of the $250 deductible—were the result of Gibson’s actions.  The circuit court found Lemerond’s testimony as to the facts and circumstance surrounding the insurance payment, the sale of the vehicle, and its ultimate loss to be credible.  Seeid. at 663 (the finder of fact at the restitution hearing is free to accept, reject and give weight to the evidence as it deems appropriate).  The defendant’s actions were the “precipitating cause of the injury” and the harm that resulted was the “natural consequence” of Gibson’s actions.  See State v. Canady, 2000 WI App 87, ¶9, 234 Wis. 2d 261, 610 N.W.2d 147 (citation omitted).  Because Acuity compensated the Poolers for their loss, the court had the authority under Wis. Stat. § 973.20(2)(d) to order Gibson to reimburse Acuity “if justice so require[d].”

The trial court did not explicitly find that “justice so requires” the restitution order, but such a determination is implicit in the restitution order, and therefore “tantamount to a finding that justice so required it,” ¶¶15, 16.

Interesting, if short, concurrence by Chief Judge Brown (¶¶17-19), to the effect that Acuity’s conduct was not an “intervening” cause so as to sever Gibson’s liability. As Chief Judge Brown assesses the problem, Acuity’s haste in attempting to make its insured whole was nothing if not laudable, and it would be bad policy “to force the unraveling of how the insurer and the insured responded to the theft[.]” Moreover, “The thief is the one who caused the insurer to act. The insurer’s action should be considered a natural and probable consequence of the theft.”

Putting aside the particulars of this case, the more general points might be as follows. Wisconsin certainly takes a broad view of liability based on a theory of natural-probable consequences / reasonable foreseeability causation. But at least in theory, an “intervening” cause may become a “superceding” one so as to sever liability. Caselaw discussion of this doctrine can be as complex as you want to make it – examples abound, of course; one will suffice: People v Rideout, 272 Mich App 602, 727 NW2d 630 (2006) – which leads to a couple of still-larger points. First, it’s increasingly difficult to explain why restitution awards, especially large ones, don’t have a punitive aspect, especially when they appear to be strict liability awards. Indeed, the court has explicitly recognized that restitution is “grounded … on the State’s penal goals that affect the defendant, such as rehabilitation, punishment and deterrence,” State v. Laura Walters, 224 Wis.2d 897, 905, 591 N.W.2d 874 (Ct. App. 1999). If so, then perhaps the holding in State v. Dugan, 193 Wis. 2d 610, 534 N.W.2d 897 (Ct. App. 1995) (restitution isn’t a “potential punishment,” therefore a defendant needn’t be apprised of its possible application as a consequence of a plea) might be outmoded and some thought given to challenging it. Second, restitution bypasses Wis. Const. Art. I § 5 (“The right of trial by jury shall remain inviolate, and shall extend to all cases at law without regard to the amount in controversy[.]”): is there no limit to what may be awarded via restitution despite this provision? To be sure, these aren’t easy challenges to mount. To the contrary. But they aren’t going to fade away, either.

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