People v. Sims

• Decision Date: 27 September 1982
• Docket Number: Cr. 22265
• Citation: 186 Cal.Rptr. 77,32 Cal.3d 468,651 P.2d 321
• Court: California Supreme Court
• Parties: , 651 P.2d 321 The PEOPLE, Plaintiff and Appellant, v. June Leora Lopes SIMS, Defendant and Respondent.

Page 77

186 Cal.Rptr. 77

32 Cal.3d 468, 651 P.2d 321

The PEOPLE, Plaintiff and Appellant, v. June Leora Lopes SIMS, Defendant and Respondent.

Cr. 22265.

Supreme Court of California.

Sept. 27, 1982.

George Deukmejian, Atty. Gen., Robert H. Philibosian, Chief Asst. Atty. Gen., Edward P. O'Brien and William D. Stein, Asst. Attys. Gen., Gloria F. DeHart and Thomas A. Brady, Deputy Attys. Gen., for plaintiff and appellant.

Julians Drous, San Francisco, under appointment by the Supreme Court, for defendant and respondent.

Alan Lieberman, Stephen Nielson, Quin Denvir, State Public Defender, and Paul D. Fogel, Deputy State Public Defender, as amici curiae on behalf of defendant and respondent.

BIRD, Chief Justice.

This case presents questions that arise when a welfare recipient who has been exonerated of fraud charges in an administrative * hearing conducted by the Department of Social Services is subsequently prosecuted in a criminal proceeding for the same alleged misconduct. The most significant issue is whether the doctrine of collateral estoppel bars the prosecution from relitigating in the criminal proceeding issues that were previously resolved in the administrative hearing.

I.

Respondent, June Sims, is a welfare recipient and mother of three children. By letter dated April 11, 1978, the Social Services Department of Sonoma County (County) informed respondent that she had received $5,395 in Aid to Families With Dependent Children (AFDC) and $1,144 in food stamp benefits to which she was not entitled. The letter claimed that respondent had failed to report that the children's stepfather, Charles Sims, was fully employed and living at home while respondent received public assistance from December of 1976 to April of 1978. The letter also demanded that respondent make restitution for the benefits alleged to have been fraudulently obtained. Respondent agreed to repay the County at a rate of $50 per month.

On May 2, 1978, the County prepared a "Notice of Action" against respondent. The notice proposed to reduce future cash grants to respondent to compensate for the alleged overpayments. On August 22, 1978, respondent filed a request for a "fair hearing" pursuant to Welfare and Institutions Code section 19050 to challenge the propriety of the County's action. ¹

Prior to the date that respondent requested a fair hearing, a criminal complaint had been filed against her in municipal court. The complaint was based on the same allegations of fraud that were the subject of the County's "Notice of Action." On September 25, 1978, the prosecution charged respondent by information with a felony violation of section 11483 (unlawfully obtaining AFDC for children not entitled to such aid) and a misdemeanor violation of former section 18910 (fraudulently acquiring food stamps). ² Respondent was arraigned on October 12th and pleaded not guilty.

On November 29, 1978, while the criminal charges were pending, respondent's fair hearing was held before a hearing officer of the California Department of Social Services (DSS). The County declined to present any evidence against respondent at the hearing. It contended that the DSS lacked jurisdiction to hear the case since criminal charges were still pending in the superior court. Respondent submitted the County's investigation report to the hearing officer and presented evidence to disprove the allegation of fraud. Charles Sims testified that during the time in question he lived at addresses other than that of respondent.

The hearing officer concluded that the DSS did have jurisdiction to hear the case and that the County had failed to meet its burden of proving that respondent had fraudulently obtained welfare benefits. The County was ordered to rescind its "Notice of Action" against respondent and refund any restitution payments respondent had made.

The director of the DSS adopted the fair hearing result on February 7, 1979. The County did not file with the director a request for a rehearing, nor did it seek judicial review of the decision.

Subsequently, respondent moved to dismiss the criminal charges pending against her in superior court. Respondent argued that the administrative finding that she had not received any overpayments rendered the County's restitution demand of April 11, 1978, void. Therefore, the requirement of section 11483 that a demand for restitution be made before a recipient accused of welfare fraud is prosecuted was not met. In the alternative, respondent claimed that the fair hearing decision barred the criminal prosecution under the doctrine of collateral estoppel.

The trial court granted respondent's motion on May 9, 1979, and dismissed the information. The state appealed this dismissal. ³

II.

Section 11483 prescribes criminal penalties for persons who have fraudulently obtained AFDC benefits. The statute incorporates by reference the requirement that "restitution shall be sought ... prior to the bringing of a criminal action." ⁴ In People v. McGee, supra, 19 Cal.3d 948, 140 Cal.Rptr. 657, 568 P.2d 382, this court held that the state's failure to comply with the statutory restitution requirement was grounds for dismissal of the criminal prosecution. (Id., at p. 966, 140 Cal.Rptr. 657, 568 P.2d 382.)

Here, respondent received a letter demanding restitution for overpayments in AFDC and food stamp benefits three months prior to the date the criminal complaint was filed. Respondent contends, however, that the subsequent fair hearing determination that no overpayments had been made rendered the request for restitution void. Therefore, under McGee, the information was correctly dismissed.

The purpose of the demand for restitution requirement is to give "limited protection to those accused of welfare fraud." (Id., at p. 965, 140 Cal.Rptr. 657, 568 P.2d 382.) The accused "ha[s] an early opportunity to make restitution and, thereby, possibly obtain favorable consideration by the prosecuting authorities." (Id., at p. 964, 140 Cal.Rptr. 657, 568 P.2d 382.) After restitution is sought, the prosecutor must make an evaluation of the circumstances of the case, including the nature of the accused's response to the restitution demand.

Once the evaluation of the case is completed, however, the prosecutor is "free to determine whether or not criminal proceedings should thereafter be pursued." (Id., at p. 965, 140 Cal.Rptr. 657, 568 P.2d 382.) There are no circumstances under which McGee mandates that the prosecution be dismissed so long as the statutory requirements were satisfied before the proceedings were commenced. For example, a criminal prosecution is not barred even though the accused has already made or is in the process of making full restitution. (People v. Isaac (1976) 56 Cal.App.3d 679, 682, 128 Cal.Rptr. 872; Madrid v. Justice Court (1975) 52 Cal.App.3d 819, 824, 125 Cal.Rptr. 348.) Similarly, McGee, itself, does not require the dismissal of a prosecution when a fair hearing exonerates the accused of the alleged fraud after the criminal proceedings have commenced.

The cases relied on by respondent do not support her contention. In People v. Harper (1981) 121 Cal.App.3d 283, 175 Cal.Rptr. 146, the Court of Appeal held that a restitution demand sent to the accused without any subsequent consideration given by the prosecutor to the accused's attempts at restitution amounted to "mechanical compliance" with section 11483 and required dismissal of the prosecution. In People v. Jenkins (1980) 28 Cal.3d 494, 509, 170 Cal.Rptr. 1, 620 P.2d 587, this court held that the statutory demand for restitution could not be circumvented by prosecuting an accused for perjury under Penal Code section 118 rather than for AFDC fraud under section 11483. Neither of these cases provides authority for the position respondent urges this court to take. ⁵

By arguing that the County's demand letter was rendered void by the fair hearing decision, respondent is in effect asking this court to find that the fair hearing decision was a conclusive determination that no overpayment of welfare benefits had been made. That administrative decision should not be binding unless the doctrine of collateral estoppel is applicable. This separate issue is addressed in the next section of the opinion.

III.

The primary issue posed by this appeal is whether the fair hearing decision exonerating respondent of welfare fraud collaterally estopped the prosecutor from pursuing a criminal action against respondent for the same alleged misconduct.

Collateral estoppel precludes a party to an action from relitigating in a second proceeding matters litigated and determined in a prior proceeding. (Teitelbaum Furs, Inc. v. Dominion Ins. Co., Ltd. (1962) 58 Cal.2d 601, 604, 25 Cal.Rptr. 559, 375 P.2d 439; Clark v. Lesher (1956) 46 Cal.2d 874, 880, 299 P.2d 865.) ⁶ Traditionally, the doctrine has been applied to give conclusive effect in a collateral court action to a final adjudication made by a court in a prior proceeding. Since the fair hearing decision exonerating respondent of welfare fraud was not a court proceeding, it must be determined initially whether an administrative decision made at a fair hearing may ever be accorded collateral estoppel effect. If this preliminary question is decided affirmatively, then this court must consider whether the traditional requirements and policy reasons for applying collateral estoppel were satisfied by the facts of this case.

A.

Much uncertainty and confusion exist in the case law as to whether the decisions of an administrative agency may ever collaterally estop a later action. "The problem seems to lie in the varying types of administrative agencies and their procedures, and widespread disagreement whether their decisions are judicial, quasi-judicial, or administrative only." (Williams v. City of Oakland (1973) 30 Cal.App.3d 64, 68, 106 Cal.Rptr. 101; see 2 Cal.Jur.3d, Administrative Law, § 239, pp. 476-478.) It is probably impossible to...