People v. Law

• Decision Date: 08 April 1999
• Docket Number: Docket No. 109763,No. 6,6
• Citation: 459 Mich. 419,591 N.W.2d 20
• Parties: PEOPLE of the State of Michigan, Plaintiff-Appellant, v. Patrick Joseph LAW, Defendant-Appellee. Calendar
• Court: Michigan Supreme Court

Page 20

591 N.W.2d 20

459 Mich. 419

PEOPLE of the State of Michigan, Plaintiff-Appellant, v. Patrick Joseph LAW, Defendant-Appellee.

Docket No. 109763.

Calendar No. 6.

Supreme Court of Michigan.

Argued Nov. 9, 1998.

Decided April 8, 1999.

[459 Mich. 420] Frank J. Kelley, Attorney General, Thomas L. Casey, Solicitor General, David Gorcyca, Prosecuting Attorney, and Marilyn

J. Day, Assistant Prosecuting Attorney, Pontiac, for the people

OPINION

TAYLOR, J.

We granted leave in this case to determine whether the trial court had authority to award interest on unpaid support as part of restitution pursuant to the Crime Victim's Rights Act, M.C.L. § 780.751 et seq.; MSA 28.1287(751) et seq.

We hold that a court does have the authority to award interest under the CVRA, and thus we vacate the restitution order and remand this case to the trial court for further proceedings consistent with this opinion.

I. FACTS AND PROCEEDINGS

Defendant, Patrick Law, pleaded guilty of desertion and abandonment, ¹ admitting that he failed to pay support for his minor child from January 1, 1990, through July 27, 1992. The trial court sentenced defendant to two to three years in prison and ordered him to pay restitution under the Crime Victim's Rights Act. At an evidentiary hearing to determine the amount of restitution, it was established that, pursuant to defendant's divorce judgment of May 14, 1979, defendant was to pay $43 a week in child support plus all his children's necessary hospital and other associated medical costs. ² The court found that defendant had never paid any child support and had failed to pay $41,732.34 in medical costs arising out of injuries suffered by his daughter in an automobile accident.

On September 28, 1994, the judge ordered restitution equal to the amount of (1) unpaid weekly child support from the May 14, 1979, date of divorce to the July 19, 1994, date of sentencing, (2) the unpaid medical costs, ³ and (3) interest on these amounts that came due after July 6, 1987. ⁴

Defendant appealed in the Court of Appeals, which agreed with defendant that the trial court erred in ordering him to pay interest on the restitution award. 223 Mich.App. 585, 593, 568 N.W.2d 90 (1997). The Court of Appeals reasoned that the CVRA does not authorize the imposition of interest and that the trial court's reliance on Langford v. Langford, 196 Mich.App. 297, 492 N.W.2d 524 (1992), was mistaken because Langford only concerned civil damages and the instant case involved restitution under a criminal statute. In addition, the Court of Appeals, relying primarily on its opinion in People v. Grant, 210 Mich.App. 467, 534 N.W.2d 149 (1995), rev'd 455 Mich. 221, 233, 565 N.W.2d 389 (1997), found that the trial court did not properly address the factors related to defendant's financial situation as required by the CVRA, and thus remanded the case to the trial court on this ground. ⁵

Plaintiff appealed to this Court, and we granted leave in order to determine whether the trial court had the authority to award interest on the unpaid support as part of restitution pursuant to the CVRA. 457 Mich. 853, 577 N.W.2d 693 (1998).

II. STANDARD OF REVIEW

In deciding this issue, we must interpret the CVRA. An issue of statutory interpretation is a question of law subject to de novo review. People v. Webb, 458 Mich. 265, 274-275, 580 N.W.2d 884 (1998).

III. DISCUSSION

A

The trial judge ordered defendant to pay restitution pursuant to subsection 16(2) of the CVRA that at the time of defendant's sentencing stated "the court, when sentencing a defendant convicted of a crime, shall order ... that the defendant make full or partial restitution to any victim of the defendant's course of conduct...." 1993 PA 341. ⁶ Section 17 of the CVRA states that "[i]n determining the amount of restitution to order under section 16, the court shall consider the amount of the loss sustained by any victim as a result of the offense." MCL 780.767(1); MSA 28.1287(767)(1). Thus, this case turns on whether the amount of the loss sustained by the victim includes interest.

The quoted language of § 17 requires a court to focus on the loss sustained by the victim. This Court has held in the past that "money has a 'use value' and interest is a legitimate element of damages" used to compensate a party for the lost use of its funds. Gordon Sel-Way Inc. v. Spence Bros., Inc., 438 Mich. 488, 499, 475 N.W.2d 704 (1991). ⁷ This situation is not distinguishable, and, accordingly, because a monetary loss includes the use value of money, i.e., interest, § 17's focus on "the loss sustained by any victim" indicates that interest is a legitimate element of monetary restitution under the CVRA.

Moreover, in addition to the language of § 17, the Legislature's use of a legally understood term such as " restitution" bears on whether interest is allowed. ⁸ The term restitution is understood in Michigan to include interest, and this can be seen in Langley v. Kirker, 247 Mich. 443, 225 N.W. 931 (1929), and Grievance Administrator v. Floyd, 447 Mich. 422, 523 N.W.2d 227 (1994). ⁹ In accord with Michigan's view is the Restatement Second on Restitution (tentative draft), § 28, p. 216, which states that "[a] judgment or order for restitution will, at the claimant's instance, include an award of an amount as interest required to prevent unjust enrichment of the defendant." Accord Restatement Restitution, § 156, p. 618. These authorities demonstrate that the term restitution should be understood with a meaning that includes interest, and thus the use of this term in the CVRA demonstrates that interest is to be included in restitution orders thereunder.

Federal decisions interpreting the federal statute on this topic, the Victim and Witness Protection Act (VWPA), also shed light on this issue. ¹⁰ The VWPA, like the CVRA, uses the term "restitution" and states that the judge must order restitution in an amount equal to the "victim's losses." This Court has interpreted the VWPA and the CVRA in a similar manner when they use similar language. See, e.g.,People v. Grant, 455 Mich. at 243, n. 30, 565 N.W.2d 389 supra. Federal courts of appeal have upheld restitution orders that included interest. For example, in United States v. Patty, 992 F.2d 1045, 1050 (C.A.10, 1993), the Tenth Circuit upheld prejudgment interest on a restitution obligation stating that "[p]rejudgment interest reflects the victim's loss due to his inability to use the money for a productive purpose, and is therefore necessary to make the victim whole." See also United States v. Rochester, 898 F.2d 971, 983 (C.A.5, 1990). In United States v. Smith, 944 F.2d 618, 626 (C.A.9, 1991), the Ninth Circuit similarly upheld an interest award and noted "[f]oregone interest is one aspect of the victim's actual loss, and thus may be part of the victim's compensation." In Virgin Islands v. Davis, 43 F.3d 41, 47 (C.A.3, 1994), the Third Circuit stated prejudgment interest "is an aspect of the victim's actual loss which must be accounted for in the calculation of restitution in order to effect full compensation." All these decisions that have interpreted the VWPA, a statute that is a federal analogy to the CVRA, indicate that interest is properly included in criminal restitution orders.

The decisions of several state courts also indicate that interest is properly included in restitution orders. For example, state courts in Alaska and Colorado have upheld criminal restitution orders that included interest in the restitution amount. In both these states, the relevant sentencing statutes are similar to the CVRA in that they use the term "restitution" and define the appropriate amount of restitution in a manner comparable to the CVRA. ¹¹ In Dorris v. State, 656 P.2d 578, 584 (AlaskaApp., 1982), the Alaska Court of Appeals found interest appropriate under that state's criminal restitution statute, stating "the purpose of the restitution statute is to make the victim whole...." Similarly, in Valenzuela v. People, 893 P.2d 97, 99 (Colo., 1995), the Colorado Supreme Court held that interest could be charged to a defendant as part of restitution stating "[a]warding interest is compensation for actual, pecuniary damage suffered by the victim incidental to the defendant's crime...." These decisions from sister states that have found interest appropriate under statutes that use language similar to the CVRA reinforce our finding that interest is a legitimate element of a restitution order under the CVRA.

B

Having determined that interest is allowed under the CVRA, the question becomes how to properly calculate the restitution amount to include the appropriate amount of interest. To be clear, it must be understood that under the approach we have just discussed and adopted foregone interest is one aspect of the victim's actual loss and the court must first determine it and add it to the underlying amount to establish the corpus, or principal, of the restitution. It would only be at that point that, assuming the version of the CVRA in effect at the time of sentencing allowed it, the court could consider the factors the Legislature articulated (defendant's income, financial needs, dependents, etc., as set forth in footnote 5) to determine if a reduction of the restitution amount was appropriate. This is, of course, a very different understanding of interest than lawyers and judges are familiar with in civil cases, where interest is usually thought of as an "add-on" to the adjudicated damages. Thus, care should be taken to avoid confusion when dealing with interest in this less familiar criminal law context. Moreover, in this case it is necessary in the calculating of the corpus to do so for two periods. The first (May 14, 1979-July 6, 1987) is the period when the Legislature had not spoken regarding the support arrearage interest, and thus a reasonable interest rate was discretionary with the court. The second (July 6, 1987-July 19, 1994) is the...