Merit Decision: Ordering Restitution. State v. Lalain.

Update: read what happened when this case was remanded here.

On July 17, 2013 the Supreme Court of Ohio handed down a merit decision in State v. Lalain, 2013-Ohio-3093. The case was accepted on both conflict certification and discretionary appeal. In a 5-2 decision written by Justice O’Donnell, for himself and Justices Pfeifer, Kennedy, French, and O’Neill, the Court held that a trial court has discretion in ordering restitution in a given case, but cannot order more than the amount of the economic loss caused by the commission of the offense, and must hold a hearing if an interested party disputes the amount of restitution ordered. Justice Lanzinger, for herself and Chief Justice O’Connor, concurred in part and dissented in part. The case was argued March 13, 2013.  Read the oral argument preview here and the analysis of that argument here.

Case Background

Daniel Lalain worked as an engineer for Aero-Instruments, a Cleveland company that designed aviation and aerospace components. Lalain resigned suddenly, and took with him numerous documents and copies of electronic files related to the work he had done. He also kept two probes he had taken home for testing.

Aero-Instruments filed a civil suit against Lalain for misappropriation of trade secrets and proprietary information. The company also contacted law enforcement about the theft. The property Lalain took was ultimately recovered, and the company dropped its civil suit.

The Criminal Case

 The Plea Agreement

Lalain was indicted for first-degree-felony-theft, for property allegedly valued at one million dollars or more. Lalain accepted a plea agreement, and pled guilty to fifth-degree-felony-theft for property valued at $500 or more but less than $5000. At the plea hearing, Lalain acknowledged the potential penalties that could be imposed at sentencing, including restitution.  But at that hearing the parties did not discuss the amount of restitution, nor was restitution expressly included as part of the plea agreement.

The Sentencing Hearing

To establish the amount of its loss, the Aero Instruments had a report prepared by the forensic accounting department of Meaden and Moore. The cost of this report was $7665. The company claimed that it expended $55,456 in time in support of this case. All of this was communicated to the court by a letter from the company.

At the sentencing hearing, while defense counsel did not formally object to the order of restitution, he appeared to state his disagreement with it.

Without holding a hearing, the Court ordered restitution in the case in the amount of $63, 121 per the company’s letter, and sentenced Lalain to a four year term of community control.

Lalain appealed the restitution order. In a split decision, the Eighth District Court of Appeals affirmed it.

Certified Conflict

The certified conflict question is, “Whether, despite the defendant’s failure to object, it is error for the trial court to order defendant to pay an amount of restitution in the absence of a specific plea agreement and without a hearing or evidence substantiating the economic loss claimed by the plaintiff?”

Conflict Case

State v. Ratliff, 2011-Ohio-2313 (2nd Dist.)

A restitution order must be supported by competent credible evidence and may not exceed the property value that corresponds to the degree of the theft conviction.

The Restitution Statute

R.C. 2929.18

(A) (1) …If the court imposes restitution, the court may base the amount of restitution it orders on an amount recommended by the victim… provided that the amount the court orders as restitution shall not exceed the amount of the economic loss suffered by the victim as a direct and proximate result of the commission of the offense. If the court decides to impose restitution, the court shall hold a hearing on restitution if the offender, victim, or survivor disputes the amount.

Lalain’s argument

Unless there is a specific agreement to the contrary, a restitution order may not exceed the property value that corresponds to the degree of the theft conviction. (essentially the holding of Ratliff,  and the position of Justice Lanzinger). The amount of restitution awarded in this case included expenditures not caused by his theft.  Further, the trial court had a duty to hold a hearing in this case.

State’s argument

A restitution order is uniquely tied to the victim’s loss, not to the degree of the theft offense, and a trial court has the discretion to order restitution in the amount of the victim’s actual loss.  The trial court may also order restitution  without a hearing based solely on the victim’s estimate when the plea agreement does not specify a specific amount and the defendant does not object. The restitution order was proper in this case, and no hearing was required .

Analysis by the Supreme Court

Justice O’Donnell began the majority opinion by reviewing the restitution statute, noting that the amount of restitution is limited to the “economic detriment suffered by the victim as a direct and proximate result of the commission of the offense,” and requires a hearing if the offender or the victim disputes the amount.

From this statute, O’Donnell made a number of findings:

  • The statute does not require incorporating restitution into a plea agreement.
  • The trial court has discretion to impose restitution based on the listed statutory factors
  • The amount of restitution is not tied to the degree of the theft offense
  • Restitution may not exceed the amount of economic loss suffered as a direct and proximate result of the commission of the offense
  • The trial court must hold a hearing on restitution if the victim or the offender disputes the amount

Applying these findings to this case, here are the holdings of the majority:

  • The certified question co-mingles the statutory restitution requirements and plea agreements, which hopelessly confuses matters.  Thus the conflict case is dismissed as improvidently certified.
  • The $63, 121 sought by Aero-Instruments was not directly, proximately caused by the theft offense in this case. They were “consequential” costs incurred after the theft, to value the property.
  • Defense counsel did dispute the amount of restitution (according to the majority, the state conceded this point at oral argument. My own recollection was this point was sharply contested).  Therefore a hearing was required in this case, and the case is remanded for that purpose.

Separate Concurrence/Dissent

Point of Agreement

  • The case should be remanded for a hearing on restitution

Disagreement

Justice Lanzinger would not have dismissed the certified conflict question. She would hold that in this case the plea agreement imposed a limit on restitution.

Justice Lanzinger believes that restitution is limited to the amount of the corresponding theft offense to which the defendant pleads, unless the defendant agrees to a higher amount as part of the plea agreement. In accepting a felony plea, a trial court is required to inform the defendant of the maximum penalty involved.  Under the facts of this case, then, restitution could be no greater than $5000, and Lalain had the right to rely on that.

She also noted that pursuant to Crim. R. 11(F), a defendant can be ordered to pay a greater amount of restitution than the correlative theft offense, as a specific part of a negotiated plea, or as a stipulation. But for that to happen, the defendant must clearly, knowingly, and voluntarily agree to the higher amount as part of the plea agreement. That did not happen here.

Case Syllabus

1. A trial court has discretion to order restitution in an appropriate case and may base the amount it orders on a recommendation of the victim, the offender, a presentence investigation report, estimates or receipts indicating the cost of repairing or replacing property, and other information, but the amount ordered cannot be greater than the amount of economic loss suffered as a direct and proximate result of the commission of the offense.

2. A trial court is required to conduct a hearing on restitution only if the offender, victim, or survivor disputes the amount of restitution ordered.

Concluding Observations

I did call this one for the defense, and noted after argument that the Court could have taken a number of different approaches, although I didn’t foresee dismissing the certified conflict question. And it did seem to me that contested point or not, the defendant protested enough to trigger a hearing in this case. Justice Lanzinger’s dissent clearly tracked her questions at oral argument suggesting that the amount of restitution is tied to the degree of felony to which the defendant agreed to plead.

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