People v. Watts

• Citation: 181 Ill.2d 133,692 N.E.2d 315,229 Ill.Dec. 542
• Decision Date: 20 February 1998
• Docket Number: No. 81548,81548
• Parties: , 229 Ill.Dec. 542 The PEOPLE of the State of Illinois, Appellant, v. Dan WATTS, Appellee.
• Court: Supreme Court of Illinois

Page 315

692 N.E.2d 315

181 Ill.2d 133, 229 Ill.Dec. 542

The PEOPLE of the State of Illinois, Appellant, v. Dan WATTS, Appellee.

No. 81548.

Supreme Court of Illinois.

Feb. 20, 1998.

Joan M. Kripke, Staff Atty., State's Atty. Appellate Prosecutor, Elgin, Jim Ryan, Attorney General, Criminal Appeals Div., Chicago, Robert K. Villa, Assistant Attorney General, Chicago, State's Attorney Lake County, Waukegan, for the People.

John S. Young, Stelk & Young, Mundelein, for Dan Watts.

Justice McMORROW delivered the opinion of the court:

Defendant, Dan Watts, was convicted of home repair fraud under the Home Repair Fraud Act (the Act) (815 ILCS 515/1 et seq. (West 1994)) in a bench trial in the circuit court of Lake County. The appellate court reversed the conviction, concluding that the Act contains an unconstitutional mandatory presumption which impermissibly relieves the State of its burden of proving that defendant did not intend to perform the promised home repairs. 281 Ill.App.3d 434, 217 Ill.Dec. 357, 667 N.E.2d 150. The State filed a petition for leave to appeal as a matter of right, under Supreme Court Rule 317 (134 Ill.2d R. 317). We granted that petition, and now affirm the decision of the appellate court.

BACKGROUND

Defendant was indicted on charges of theft (720 ILCS 5/16-1(a)(4)(A) (West 1994)) and home repair fraud (815 ILCS 515/3(a)(1) (West 1994)). The theft count alleged that defendant knowingly obtained control over the property of the alleged victims by deception, in that he accepted money from the victims by promising to perform home repairs which he had no intent to actually perform. The home repair fraud count similarly alleged that defendant had knowingly entered into a contract for home repair when he had no intent to perform the promised work.

There was little dispute over the facts at trial. The Lutz family decided to build an addition to their home in Highland Park. In September 1993, they contacted defendant about serving as the general contractor for the construction of the addition. On February 12, 1994, the Lutzes and defendant entered into a contract under which defendant was to serve as the general contractor. Under the terms of the contract, defendant was to receive a total of $67,509 in compensation. One third of this sum was to be paid as an initial retainer, and a third was to be paid when the work began. The remaining third was to be paid in increments as defendant incurred costs, with full payment of any outstanding By the time the contract was executed, the Lutzes had paid the initial retainer of $22,800. Defendant told the Lutzes that he would use this money to purchase materials, secure subcontractors, and arrange for building permits. Defendant testified at trial that he ordered and made down payments on some of the materials required for the project, though he admitted on cross-examination that he could not produce receipts for these materials. Defendant also procured the necessary work permits, and contacted seven subcontractors--four electricians, two plumbers and an excavation firm--in connection with the work on the Lutz home. He solicited bids from each of the seven, and hired the excavation firm.

[229 Ill.Dec. 545] balance to be made within 30 days of the completion of construction.

The actual construction of the addition did not last long. The architectural plans for the construction were approved in early April 1994. On April 19, defendant began working on the project. On April 20, he arrived at the home with the excavation subcontractor, who performed the necessary excavation. Defendant paid the subcontractor $1,680 for the work done that day. However, three persons (the architect for the work, the Highland Park building inspector, and another contractor) each told the Lutzes that the hole that the subcontractor had dug was too deep, and, as a result, threatened to cause the existing Lutz home to collapse into the new hole.

According to Mrs. Lutz, on April 23, defendant asked the Lutzes for additional money which he claimed he needed in order to connect pipes from the house to the storm sewer. The contract provided that the next payment was due at the time that work commenced. Because of the problem with the excavation, the Lutzes refused to pay defendant any additional sums. On April 25, defendant stopped working on the Lutz home and removed his employees and their equipment from the job. Defendant testified that he did this because the Lutzes told him that they did not want him to continue working on the project. The Lutzes had numerous conversations with defendant in the weeks that followed, although they never paid defendant and he never resumed working on their home. Mrs. Lutz conceded that on three occasions between April 28 and May 1, defendant offered to continue work on the project at his own expense, and would not expect any payment from the Lutzes until he completed the project. She also testified that they did not accept any of these offers. Thereafter, defendant was charged with theft and home repair fraud.

At the conclusion of the bench trial, the court found defendant not guilty of the theft charge, and guilty of the home repair fraud charge. With respect to the theft count, the court found that the State failed to prove that defendant had not intended to perform the construction services at the time that he entered into the contract. Therefore, an element of theft--intent "to deprive the owner permanently of the use or benefit of the property" (720 ILCS 5/16-1(a)(4)(A) (West 1994))--was not established by the evidence.

However, the court reached a different conclusion on the home repair fraud count. The portion of the Act under which defendant was indicted defines home repair fraud as having two elements: (1) entering a contract for home repair, and (2) doing so with the intent not to perform the work, or with the knowledge that the work will not be completed. 815 ILCS 515/3(a)(1) (West 1994). The Act also specifies that "it shall be a rebuttable presumption of intent" not to perform where (1) the defendant did not substantially perform the promised work; (2) the defendant refused to refund the victim's payments; and (3) the defendant committed any of seven other acts enumerated in the statute, such as failure to use qualified personnel, or failure to notify a customer of a change in business name. See 815 ILCS 515/3(c) (West 1994).

There was no dispute that defendant had entered into a contract for home repair. Thus, the only question at trial was whether defendant had intended to perform the promised work at the time he entered into the contract. While the trial court found that the State had not proved that defendant did not intend to perform the home repairs beyond a reasonable doubt, as the theft count required, the court found that the State had Defendant appealed, and the appellate court reversed the conviction. The appellate court determined that the Act's intent presumption is mandatory, that is, it tells the fact finder that it must assume the existence of intent if the State proves the existence of the factors listed in the statute, unless the presumption has been rebutted. 281 Ill.App.3d at 440, 217 Ill.Dec. 357, 667 N.E.2d 150. The appellate court further concluded that once the presumption of intent is triggered, the burden of persuasion shifts to the defendant to disprove the element of intent. Under the United States Supreme Court's holding in Francis v. Franklin, 471 U.S. 307, 105 S.Ct. 1965, 85 L.Ed.2d 344 (1985), and other cases, the appellate court ruled that such a mandatory, burden-shifting presumption violates due process of law under the United States and Illinois Constitutions. 281 Ill.App.3d at 442, 217 Ill.Dec. 357, 667 N.E.2d 150.

[229 Ill.Dec. 546] proved the factors necessary to raise a presumption of intent under the Act. Specifically, the court found that the State had proved that defendant did not substantially perform the work; had refused to return the [181 Ill.2d 139] victims' payments; and had failed to use qualified personnel by hiring the excavation subcontractor. Thus, the court concluded that the statutory presumption of intent was triggered. The court also found that the defendant failed to rebut that presumption. For these reasons, the court entered a finding of guilty on the home repair fraud count.

The appellate court also determined that the State was collaterally estopped from retrying defendant for home repair fraud because, in a retrial on the home repair fraud count, the trial court would have to decide whether defendant intended to perform the home repairs without the aid of the statutory presumption. The appellate court noted that in the original trial, the State had been required to prove, as an element of the theft count, that defendant did not intend to perform the promised work. The appellate court further held that, because the trial court explicitly found that the State had failed to prove the element of intent, the issue of defendant's intent had been adjudicated and could not be re-presented to the trial court. The State appealed.

ANALYSIS

The Act provides, in relevant part:

" § 3. Home Repair Fraud

(a) A person commits the offense of home repair fraud when he knowingly enters into an agreement or contract, written or oral, with a person for home repair, and he knowingly:

(1) Misrepresents a material fact relating to the terms of the contract or agreement or the preexisting or existing condition of any portion of the property involved, or creates or confirms another's impression which is false and which he does not believe to be true, or promises performance which he does not intend to perform or knows will not be performed; * * *

* * *

(c) For purposes of subsection (a), paragraph (1), it shall be a rebuttable presumption of intent or knowledge that a person promises performance which he does not intend to perform and knows will not be performed when,...