People v. Lee, Docket No. 322154.

• Citation: 314 Mich.App. 266,886 N.W.2d 185
• Decision Date: 02 February 2016
• Docket Number: Docket No. 322154.
• Parties: PEOPLE v. LEE.
• Court: Court of Appeal of Michigan (US)

314 Mich.App. 266

886 N.W.2d 185

PEOPLE

v.LEE.

Docket No. 322154.

Court of Appeals of Michigan.

Submitted July 14, 2015, at Detroit.

Decided Feb. 2, 2016, at 9:00 a.m.

Bill Schuette, Attorney General, Aaron D. Lindstrom, Solicitor General, Jessica R. Cooper, Prosecuting Attorney, Thomas R. Grden, Chief, Appellate Division, and Joshua J. Miller, Assistant Prosecuting Attorney, for the people.

State Appellate Defender (by Marilena David–Martin) for defendant.

Before: WILDER, P.J., and SHAPIRO and RONAYNE KRAUSE, JJ.

WILDER

, P.J.

Defendant appeals by delayed leave granted the trial court's order of restitution following his plea of nolo contendere to a charge of false pretenses of $20,000 or more, MCL 750.218(5)(a)

.¹ For the reasons set forth below, we affirm.

This prosecution arose out of the sale of real property located at 5100 Deer Run, Orchard Lake, Michigan. Defendant and three others engaged in a scheme to secure mortgage loans from First Mariner Bank (the Bank). Defendant was the loan officer involved in the transactions. Through the scheme, codefendant Jack Kahn secured loans of $1,125,000 and $375,000 for the purchase of the property. An FBI special agent testified that defendant received “over $600,000 from the sale of the property.” The Bank sold the loans to investors, but it subsequently repurchased the loans for $1,176,226.13 and $411,000 due to nonpayment. Thereafter, the Bank foreclosed on the property, taking ownership of the premises following a sheriff's sale, at which it made a full-credit bid. The Bank later resold the property for $333,000.

Before charges were brought against defendant and his codefendants (Kahn and Katherine Kudla), the Bank initiated a civil suit involving the same subject matter.² The trial court granted codefendants' motions for summary disposition under MCR 2.116(C)(10)

, holding that the Bank's claims were barred because they arose out of a debt that had been extinguished as a matter of law by the Bank's full-credit bid, such that the Bank was not entitled to any damages.³

Defendant pleaded nolo contendere to a charge of false pretenses of $20,000 or more, MCL 750.218(5)(a)

,⁴ and was sentenced to a 60–day jail term that was held in abeyance pending successful completion of 5 years' probation. At the restitution hearing, the prosecutor requested that restitution be ordered in the amount of $1,092,343 and that defendant and his codefendants be held jointly and severally liable for the total amount of restitution. The trial court issued a restitution order requiring defendant, jointly and severally with Khan and Kudla, to reimburse $1,092,343 to the Bank.⁵

On appeal, defendant contends that the trial court erred by finding that the Bank had suffered a loss and, therefore, erred by ordering restitution as a matter of law because the Bank is deemed to have received full payment of the $1,125,000 loan through the full-credit bid. We disagree.

A trial court's decision to order restitution is reviewed for an abuse of discretion, People v. Gubachy, 272 Mich.App. 706, 708, 728 N.W.2d 891 (2006)

, which “occurs when the trial court chooses an outcome that falls outside the range of principled outcomes,” People v. Gonzalez–Raymundo, 308 Mich.App. 175, 186, 862 N.W.2d 657 (2014). “However, ‘[w]hen the question of restitution involves a matter of statutory interpretation, review de novo applies.’ ” Gubachy, 272 Mich.App. at 708, 728 N.W.2d 891 (citation omitted) (alteration in original). A trial court's factual findings underlying a restitution order are reviewed for clear error. Id., citing MCR 2.613(C). “A finding is clearly erroneous if this Court is left with the definite and firm conviction that a mistake has been made.” People v. Allen, 295 Mich.App. 277, 281, 813 N.W.2d 806 (2012).

Crime victims are entitled to restitution under the Michigan Constitution, Const. 1963, art. 1, § 24

, and the Crime Victim's Rights Act (CVRA), MCL 780.751 et seq.

People v. Bell, 276 Mich.App. 342, 346, 741 N.W.2d 57 (2007). Article 1, § 24(1) of the Michigan Constitution provides that crime victims have “[t]he right to restitution.” MCL 780.766 provides, in part:

(2) Except as provided in subsection (8), when sentencing a defendant convicted of a crime, the court shall order, in addition to or in lieu of any other penalty authorized by law or in addition to any other penalty required by law, that the defendant make full restitution to any victim of the defendant's course of conduct that gives rise to the conviction....

* * *

(8) The court shall order restitution to the crime victim services commission or to any individuals, partnerships, corporations, associations, governmental entities, or other legal entities that have compensated the victim or the victim's estate for a loss incurred by the victim to the extent of the compensation paid for that loss. The court shall also order restitution for the costs of services provided to persons or entities that have provided services to the victim as a result of the crime. Services that are subject to restitution under this subsection include, but are not limited to, shelter, food, clothing, and transportation. However, an order of restitution shall require that all restitution to a victim or victim's estate under the order be made before any restitution to any other person or entity under that order is made. The court shall not order restitution to be paid to a victim or victim's estate if the victim or victim's estate has received or is to receive compensation for that loss, and the court shall state on the record with specificity the reasons for its action. [Emphasis added.] ^[6]

The only exception to this mandatory action is when “the victim or victim's estate has received or is to receive compensation for that loss....” MCL 780.766(8)

; see also Bell, 276 Mich.App. at 347, 741 N.W.2d 57

. Thus, under the clear statutory language indicating that the trial court shall order restitution to the victim, “restitution is mandatory, unless the exception applies.” Bell, 276 Mich.App. at 347, 741 N.W.2d 57 (“The use of the word ‘shall’ indicates that the directive to order restitution is mandatory, unless the exception applies.”). Notably, the statutory language does not include any mitigating language predicated on the preclusion of recovery, or a finding of no damages, in a separate suit. Accordingly, the court is required to consider the amount of the victim's “ loss,” MCL 780.767(1), and order the defendant to “make full restitution,” MCL 780.766(2).

In support of his position that the Bank is not entitled to restitution because of its full-credit bid on the property, defendant cites New Freedom Mtg. Corp. v. Globe Mtg. Corp., 281 Mich.App. 63, 68, 761 N.W.2d 832 (2008)

, in which this Court stated:

When a lender bids at a foreclosure sale, it is not required to pay cash, but rather is permitted to make a credit bid because any cash tendered would be returned to it. If this credit bid is equal to the unpaid principal and interest on the mortgage plus the costs of foreclosure, this is known as a “full credit bid.” When a mortgagee makes a full credit bid, the mortgage debt is satisfied, and the mortgage is extinguished. [Citations omitted.]

As such, “the full credit bid rule dictates that there are no damages,” even in actions involving fraudulent inducement allegations against a nonborrower third party. See id. at 72, 74–75, 86, 761 N.W.2d 832

. In light of this rule, defendant asserts that “for restitution purposes, by virtue of its full credit bid, the Bank has been paid back the full amount of the ... Loan, just as if the property had been sold for that amount to a third party, and therefore, has not suffered any loss in connection with the ... Loan.” (Emphasis omitted.)

Defendant has failed to identify any authority holding that restitution should be precluded or reduced on the basis of a full-credit bid, and we find no basis for this conclusion given the mandatory nature of restitution. Instead, this Court has rejected the argument that an award of restitution may be precluded by the result of civil proceedings, which indicates that the fact that civil damages are not available due to a full-credit bid does not necessarily mean that restitution is also unavailable. “[T]he statutory scheme for restitution is separate and independent of any damages that may be sought in a civil proceeding.... [R]estitution is not a substitute for civil damages.” In re McEvoy, 267 Mich.App. 55, 67, 704 N.W.2d 78 (2005)

; see also Bell, 276 Mich.App. at 349, 741 N.W.2d 57 (“The existence of the civil settlement between [the parties] does not relieve the sentencing court of its statutorily mandated duty to order restitution.”). Likewise, in People v. Dimoski, 286 Mich.App. 474, 481, 780 N.W.2d 896 (2009), this Court stated that a “civil judgment alone provides no basis for reduction in the restitution award.” (Quotation marks and citation omitted.)

Although the victim will have the benefit of both a civil judgment and a restitution order to obtain monetary relief from the defendant, the availability of two methods does not mean that the victim will have a double recovery, but merely increases the probability that the perpetrator of a crime will be forced to pay for the wrongdoing committed. [Id. at 482, 780 N.W.2d 896

.]

Accordingly, the mere fact that the Bank may not be entitled to civil damages on the basis of its full-credit bid does not render the trial court's restitution order erroneous or excessive or establish that the Bank did not incur any loss due to defendant's conduct.

Moreover, as the prosecution observes on appeal, the Bank did, in fact, incur actual economic loss from the criminal activities of defendant and his codefendants, as it lost the capital that it disbursed when it provided the loan. Although the Bank ultimately recouped a small portion of the original capital that it lost when it sold the real property that served as the collateral for the loan, it was not until this...