Gall v. U.S.

• Decision Date: 07 April 1994
• Docket Number: No. 92-4128,92-4128
• Citation: 21 F.3d 107
• Parties: John W. GALL, Petitioner-Appellant, v. UNITED STATES of America, Respondent-Appellee.
• Court: U.S. Court of Appeals — Sixth Circuit

Page 107

21 F.3d 107

62 USLW 2702

John W. GALL, Petitioner-Appellant, v. UNITED STATES of America, Respondent-Appellee.

No. 92-4128.

United States Court of Appeals, Sixth Circuit.

Submitted Aug. 17, 1993.

Decided April 7, 1994.

John W. Gall (briefed), pro se.

Linda M. Betzer, Asst. U.S. Atty. (briefed), Cleveland, OH, for U.S.

Before: MERRITT, Chief Judge; JONES, Circuit Judge; and CELEBREZZE, Senior Circuit Judge.

CELEBREZZE, Senior Circuit Judge, delivered the opinion of the court, in which MERRITT, Chief Judge, joined. JONES, Circuit Judge (pp. 12-14), delivered a separate concurring opinion.

CELEBREZZE, Senior Circuit Judge.

The petitioner pro se, John W. Gall, appeals a district court order denying his 28 U.S.C. Sec. 2255 motion to revise sentence. Gall avers that the district court wrongfully ordered him to pay restitution for losses arising from three crimes charged against him, which were dismissed by the government in exchange for his guilty plea to one count of possession with intent to distribute cocaine, in violation of 21 U.S.C. Sec. 841(a)(1).

Our review finds Gall's assertion to be well taken. Specifically, we hold: 1) a district court may order a defendant to pay restitution conditioned upon supervised release solely for crimes of which the defendant was actually charged and convicted; and 2) the government is not a victim to which a district court may order a defendant to pay restitution for the purpose of recovering drug "buy money" and other costs of investigation voluntarily paid out.

I.

Four months after his October 2, 1989 guilty plea, the district court sentenced Gall to twenty-seven months incarceration, followed by a three year period of supervised release. The district court also ordered Gall to pay restitution to the government to recoup drug purchase money used by undercover agents as part of their investigation of all four crimes charged.

On December 30, 1991, Gall, pro se, petitioned the district court to revise his sentence pursuant to 28 U.S.C. Sec. 2255, ¹ claiming he was wrongfully ordered to pay restitution on allegations of crimes against him, which were dismissed by the government in exchange for his guilty plea. The district court held that Gall's restitution was properly ordered as a special condition of supervised release, not as restitution under the Victim and Witness Protection Act of 1982 ("VWPA"), 18 U.S.C. Secs. 3663, 3664. ² The district court determined that the government was not a victim of Gall's crimes entitled to compensatory restitution, but rather deserved recoupment of the "buy money" government agents gave Gall during the investigation. Accordingly, the district court denied Gall's petition.

II.

On appeal, Gall controverts the district court's denial of his motion to revise sentence. Relying on the United States Supreme Court's holding in Hughey v. United States, 495 U.S. 411, 110 S.Ct. 1979, 109 L.Ed.2d 408 (1990), Gall avers that the VWPA authorizes a federal court to order restitution only for losses related to an offense of conviction. The government claims that Hughey is inapposite to the instant case because the district court ordered restitution as a condition of supervised release pursuant to 18 U.S.C. Sec. 3583(d) and not pursuant to the VWPA.

To prevail under 28 U.S.C. Sec. 2255, a defendant must show a "fundamental defect" in the proceedings which necessarily results in a complete miscarriage of justice or an egregious error violative of due process. United States v. Ferguson, 918 F.2d 627, 630 (6th Cir.1990). A reviewing court is obliged to review de novo denials of 28 U.S.C. Sec. 2255 petitions, Taylor v. United States, 985 F.2d 844, 845 (6th Cir.1993), while examining the district court's factual findings for clear error. ³ White v. Smith, 984 F.2d 163, 165 (6th Cir.1993); Warner v. United States, 975 F.2d 1207, 1212 (6th Cir.1992), cert. denied, --- U.S. ----, 113 S.Ct. 1314, 122 L.Ed.2d 702 (1993); McCall v. Dutton, 863 F.2d 454, 459 (6th Cir.1988), cert. denied, 490 U.S. 1020, 109 S.Ct. 1744, 104 L.Ed.2d 181 (1989); United States v. Tucker, 836 F.2d 334, 340 (7th Cir.1988), cert. denied, 488 U.S. 855, 109 S.Ct. 143, 102 L.Ed.2d 115 (1988), 490 U.S. 1105, 109 S.Ct. 3154, 104 L.Ed.2d 1018 (1989).

In Hughey v. United States, the Supreme Court held that the VWPA limits the imposition of restitution to compensate for losses arising solely from the offense of conviction and not for losses caused by other alleged criminal activities. Hughey v. United States, 495 U.S. at 420-422, 110 S.Ct. at 1984-85. Panels of this court have acknowledged the Hughey limitation in VWPA restitution cases. See United States v. Streebing, 987 F.2d 368, 373-374 (6th Cir.1993); United States v. Jewett, 978 F.2d 248, 250-251 (6th Cir.1992). The district court, in the instant case, ruled Hughey inapplicable to its order because the restitution was imposed pursuant to 18 U.S.C. Sec. 3583(d) and U.S.S.G. Sec. 5E1.1(a) as a special condition of supervised release and not pursuant to the VWPA.

18 U.S.C. Sec. 3583(d) permits a sentencing court to order "... as a further condition of supervised release, ... any condition set forth as a discretionary condition of probation in section 3563(b)(1) through (b)(10) and (b)(12) through (b)(20), and any other condition it considers to be appropriate." 18 U.S.C. Sec. 3563(b)(3) permits a sentencing court to order a defendant specifically to "... make restitution to a victim of the offense under sections 3663 and 3664 (but not subject to the limits of Sec. 3663(a)) ..." as a special condition of probation. As previously noted, 18 U.S.C. Sec. 3663 and Sec. 3664 codify the VWPA. The limitation language of Sec. 3663(a), ⁴ mandates the application of the VWPA only to offenses violating Title 18 or certain subsections of Sec. 902 of the Federal Aviation Act of 1958. 18 U.S.C. Sec. 3563(b)(3), the probation provision cited by the supervised release statute, however, expressly negates this limitation where restitution is ordered as a condition of probation or supervised release. Thus, the district court, in the case at bar, had the authority to order restitution as a condition of supervised release following a 21 U.S.C. Sec. 841(a)(1) conviction. This restitution, pursuant to the plain language of the probation provision, 18 U.S.C. Sec. 3563(b)(3), falls squarely within the purview of the VWPA. It follows that because restitution in the instant case was ordered in accordance with the VWPA, the Hughey mandate, which restricts restitution orders to losses arising from offenses of conviction, must apply. Though Hughey was decided May 21, 1990, three months after Gall was sentenced, a panel of this court held that Hughey applies retroactively to sentences imposed before May, 1990. United States v. Guardino, 972 F.2d 682, 687, n. 7 (6th Cir.1992).

The application of Hughey to the instant case is bolstered by an examination of 18 U.S.C. Sec. 3563(b)(3) and VWPA Secs. 3663(a) and 3664(a). All three provisions refer to compensation for losses to victims of "the offense." Since the Hughey court focused on this language in reaching its decision, it would seem the Hughey limitation should similarly apply to that language where ever it appears. See Hughey v. United States, 495 U.S. at 417-419, 110 S.Ct. at 1983-1984. Further, in construing this language, the Hughey court also invoked the rule of lenity as an added ground for limiting the application of the VWPA to offenses of conviction. Hughey v. United States, 495 U.S. at 422, 110 S.Ct. at 1985. Such lenity should also apply to the construction of the identical words in Sec. 3563(b)(3). Finally, a panel of this court, in United States v. Guardino, stated its belief that the Supreme Court in Hughey "... strongly implied that a restitution order may not go beyond the counts of conviction under any circumstances." United States v. Guardino, 972 F.2d at 687.

An examination of the other provision the district court relied upon, U.S.S.G. Sec. 5E1.1(a), likewise supports the application of Hughey to the instant case. U.S.S.G. Sec. 5E1.1(a), as written at the time of Gall's sentencing in 1990, permitted a court to order restitution to the victim as a condition of supervised release, in accordance with certain provisions of 18 U.S.C. Sec. 3663, but irrespective of the limitation language of Sec. 3663(a). ⁵ Thus, in the instant case, in imposing restitution as a condition of supervised release pursuant to U.S.S.G. Sec. 5E1.1(a), the district court was obliged to order restitution in accordance with the provisions of the VWPA, as construed in Hughey. See United States v. Daniel, 956 F.2d 540, 543-544 (6th Cir.1992) (A panel of this court held that restitution ordered pursuant to U.S.S.G. Sec. 5E1.1 was limited to the loss caused by the crime of which defendant was convicted).

The district court, in footnote seven of its Memorandum of Opinion, further attempted to distinguish its restitution order from VWPA restitution by stating that because 18 U.S.C. Sec. 3663(a) limits restitution to losses arising from crimes violating Title 18, U.S.C. or 49 U.S.C. Sec. 1472(h), (i), (j) or (n), Gall's violation of 21 U.S.C. Sec. 841(a)(1) could not trigger its application. As we have already noted, when VWPA restitution is ordered as a condition of supervised release, 18 U.S.C. Sec. 3583(d), by its reference to 18 U.S.C. Sec. 3563(b)(3), explicitly declines to subject the order to the limitations of 18 U.S.C. Sec. 3663(a). Thus, the district court erroneously stated that Gall's restitution order could not have been made pursuant to the VWPA.

The district court also relies upon a Ninth Circuit opinion, United States v. Duvall, 926 F.2d 875, 876 (9th Cir.1991), to conclude that Hughey cannot be applied to restitution which is not ordered pursuant to the VWPA. The Duvall court declined to apply Hughey to restitution ordered as a condition of probation and not specifically pursuant to the VWPA. In...