State v. Islam

• Decision Date: 30 June 2016
• Docket Number: SC S063202,CC 130331128,CA A154949
• Citation: 359 Or. 796,377 P.3d 533
• Parties: State of Oregon, Respondent on Review, v. Rasool Islam Islam, Petitioner on Review.
• Court: Oregon Supreme Court

359 Or. 796

377 P.3d 533

State of Oregon, Respondent on Review

v.Rasool Islam Islam, Petitioner on Review.

CC 130331128

CA A154949

SC S063202

Supreme Court of Oregon.

Argued and submitted November 13, 2015.

June 30, 2016

Emily P. Seltzer, Deputy Public Defender, Salem, argued the cause and filed the brief for petitioner on review. With her on the brief was Ernest G. Lannet, Chief Defender, Office of Public Defense Services.

Michael S. Shin, Assistant Attorney General, argued the cause and filed the brief for respondent on review. With him on the brief were Ellen F. Rosenblum, Attorney General, and Paul L. Smith, Deputy Solicitor General.

Before Balmer, Chief Justice, Kistler, Walters, Landau, Baldwin, Brewer, and Nakamoto, Justices.^**

WALTERS

, J.

Defendant shoplifted 15 pairs of jeans from a Macy's retail department store and was convicted of one count of theft in the second degree. ORS 164.045

. Under ORS 137.106(1)(a), the prosecutor sought restitution for Macy's economic damages based on the retail price of the jeans at the time and place of the theft. Defendant argued that restitution instead should be based on the value of the jeans on the wholesale market—the market to which Macy's would resort to replace the jeans—and any lost profits that Macy's could prove resulted from the theft. The trial court granted restitution based on the retail value of the jeans, and the Court of Appeals affirmed. State v. Islam , 269 Or.App. 22, 29, 344 P.3d 22 (2015). For the reasons that follow, we conclude that a retail seller of goods that have been stolen may recover, as restitution, the reasonable value of those goods on the market to which the seller would resort to replace those goods at the time and place of conversion, together with any additional losses that the state proves the victim sustained. In this case, because the state did not prove any such additional losses, the victim is limited to restitution in the amount of the reasonable wholesale value of the jeans. We reverse and remand for further proceedings.

Oregon law provides that restitution may be awarded when a defendant has been convicted of a crime that results in economic damages and the state has presented evidence of such damages. The court must enter a judgment “requiring that the defendant pay the victim restitution in a specific amount that equals the full amount of the victim's economic damages as determined by the court.” ORS 137.106(1)(a)

. As used in that statute, “economic damages” “[h]as the meaning given that term in ORS 31.710, except that ‘economic damages' does not include future impairment of earning capacity.” ORS 137.103(2). ORS 31.710(2)(a) defines “economic damages” as follows:

“ ‘Economic damages' means objectively verifiable monetary losses including but not limited to reasonable charges necessarily incurred for medical, hospital, nursing and rehabilitative services and other health care services, burial and memorial expenses, loss of income and past and future impairment of earning capacity, reasonable and necessary expenses incurred for substitute domestic services, recurring loss to an estate, damage to reputation that is economically verifiable, reasonable and necessarily incurred costs due to loss of use of property and reasonable costs incurred for repair or for replacement of damaged property, whichever is less.”

In this court, defendant argues that the victim's economic damages must be measured by what it lost—the jeans—and the cost of replacing them. Defendant focuses on the general phrase “objectively verifiable monetary losses,” and, in particular, on the losses described in the last phrase of ORS 31.710(2)(a)

, describing “reasonable and necessarily incurred costs due to loss of use of property” and “costs incurred for repair or replacement of damaged property.” Defendant acknowledges that, in this case, the stolen jeans were not recovered, and thus that the final phrase is inapplicable as the jeans were not “damaged property.” Nonetheless, he argues that the proper measure of economic damages for unrecovered stolen goods is the monetary loss represented by their “loss of use,” which is, in this circumstance, the cost necessary to replace them. Defendant contends that, when the victim of a theft is a retail seller of goods and is able to replace stolen goods by paying the wholesale price of those goods, the wholesale cost of those goods represents the victim's economic loss. Defendant acknowledges that such a retail seller also may incur additional losses, such as lost profits, but, defendant asserts, those additional losses should not be assumed; they must be proved. In this case, defendant argues, the state failed to prove any such losses, and Macy's was therefore not entitled to recover restitution in a sum greater than the value of the jeans on the wholesale market.¹

In response, the state argues that the lower courts correctly concluded that the proper measure for economic damages when goods are stolen from a retail seller is the reasonable market value of the goods at the time and place they were stolen, which, in a shoplifting case, is the price at which the retail seller offers the goods for sale. The state maintains that defendant misapprehends the significance of the reference in ORS 31.710(2)(a)

to the “loss of use” of goods or the “costs incurred” for their replacement. Those references, the state argues, are to damages incurred when property has been recovered or damaged, not to damages incurred for goods that have been stolen and not recovered. Furthermore, the state contends, limiting a victim's recovery to the wholesale price of stolen items would not fully compensate the victim, even if the victim also were entitled to recover its lost profits. The state explains that the difference between the wholesale price at which a retailer acquires goods and the retail price for which it sells them is not, as defendant suggests, merely “lost profits”; defendant neglects to account for the costs of bringing the goods to the retail market.

We agree with the parties that the final phrase of ORS 31.710(2)(a)

—“reasonable costs incurred for repair or for replacement of damaged property, whichever is less”—applies to “damaged property,” not stolen property, and is inapplicable here.² As to the phrase “loss of use of property,” we take a different view from that of either party. In our view, the phrase “loss of use” is used to describe a specific type of loss—the damages resulting from property being unavailable for a limited period of time—and not the type of loss that occurs when goods are stolen and not recovered.

As we explained in State v. Ramos , 358 Or. 581, 368 P.3d 446 (2016)

, restitution under ORS 137.106 is informed by principles enunciated in civil cases concerning recoverable economic damages. See id. at 594, 368 P.3d 446

(legislature's “purpose in creating the restitution procedure as a substitute for a civil proceeding make[s] civil law concepts relevant” to determination of damages for purposes of restitution). And, in civil cases, the phrase “loss of use” is used to describe the damages that result when conduct results in property being temporarily unavailable for use for a limited period of time.

“Temporary injury, or injury which is reasonably susceptible of repair, justifies damages measured by the loss of use or rental value during the period of the injury, or the cost of restoration, or both, depending on the circumstances.” Hudson v. Peavey Oil Company , 279 Or. 3, 10, 566 P.2d 175 (1977)

. See also

Bullock v. Hass , 280 Or. 501, 503–04, 571 P.2d 902 (1977) (plaintiff was entitled to “loss of use” damages, measured in terms of lost profits, where defendant's fraud caused delivery truck to be out of commission for six weeks); Scott v. Elliott , 253 Or. 168, 182, 451 P.2d 474 (1969) (in dispute over possession of land, the “measure of damages for the temporary loss of the use of the property is the fair rental value of the property”); Parker v. Harris Pine Mills, Inc. , 206 Or. 187, 204, 291 P.2d 709 (1955) (“Where defendant's wrongful act has deprived plaintiff temporarily of the use and enjoyment of his property, plaintiff is entitled to recover therefor, and is not limited to the mere cost of restoring the property to its former condition.” (Citations omitted.)). In using the phrase “loss of use” in ORS 31.710, we think it likely that the legislature meant to address situations concerning temporary interference with or deprivation of property, and not circumstances such as those in this case, in which the deprivation of property is permanent.

More importantly, however, ORS 31.710(2)(a)

lists “loss of use” as just one of the “objectively verifiable monetary losses” recoverable in restitution. ORS 31.710(2)(a) defines recoverable “economic damages” to mean “objectively verifiable monetary losses” and states that those losses include, but are not limited to, “loss of use,” and other specifically listed losses. Objectively verifiable monetary losses also include monetary losses that a victim could recover if the victim were a plaintiff in a civil action against the defendant. Ramos , 358 Or. at 593–94, 368 P.3d 446.

If the victim in this case were a plaintiff in a civil action against defendant, the victim would have a claim against defendant for conversion. In such an action, Oregon has long followed the rule that “the measure of damages for the conversion of personal property is the reasonable market value of the goods converted at the time and place of conversion with interest thereon from that date.”

Hall v. Work , 223 Or. 347, 357, 354 P.2d 837 (1960)

; see also

Swank v. Elwert , 55 Or. 487, 499,105 P. 901 (1910) (citing case law and treatises).³

When there is only one market for the sale and purchase of goods at the time and place of conversion, then there will be only one market value. There may, however, be more than one market on which goods are bought and sold at that time and place. For...