State v. Ramos

• Decision Date: 19 February 2016
• Docket Number: CC C092342CR,CA A150423,SC S062942.
• Citation: 358 Or. 581,368 P.3d 446
• Parties: STATE of Oregon, Respondent on Review, v. Ema RAMOS, Petitioner on Review.
• Court: Oregon Supreme Court

358 Or. 581

368 P.3d 446

STATE of Oregon, Respondent on Review,

v.Ema RAMOS, Petitioner on Review.

CC C092342CR

CA A150423

SC S062942.

Supreme Court of Oregon.

Argued and Submitted Sept. 15, 2015.

Decided Feb. 19, 2016.

Morgen E. Daniels, 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.

Doug M. Petrina, Assistant Attorney General, Salem, 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.

Amy C. Liu, Portland, filed the brief for amicus curiae National Crime Victim Law Institute. With her on the brief was Margaret Garvin.

Before BALMER, Chief Justice, and KISTLER, WALTERS, LANDAU, BALDWIN, BREWER, and NAKAMOTO, Justices.^**

WALTERS

, J.

After defendant set fire to her restaurant and filed a fraudulent claim with her insurance company for damage to restaurant equipment, she was convicted of second-degree arson and attempted first-degree aggravated theft. Thereafter, the state sought a restitution award against defendant. Under ORS 137.106

,¹ the trial court ordered defendant to pay restitution and included in its restitution award to one of the victims, defendant's insurer, fees that the victim had paid to attorneys and investigators for their time spent in investigating defendant's claim for benefits and in providing grand jury and trial testimony. Defendant challenged that award on appeal, claiming that it was improper to include those investigation and witness fees in the award. The Court of Appeals affirmed the restitution award, State v. Ramos, 267 Or.App. 164, 340 P.3d 703 (2014), as do we.

The pertinent facts are undisputed. Defendant operated a restaurant on premises that she leased, and, in December 2008, set fire to the restaurant. Within a day, defendant called her insurer, Oregon Mutual Insurance Company (Oregon Mutual), to make a claim for loss to business property. Oregon Mutual investigated the claim and hired attorney Daniel Thenell of the law firm Smith Freed & Eberhard (Smith Freed) in December 2008 to "provide legal guidance to the insurance company to determine its coverage obligations" and to "steer the investigation into the cause and origin of the fire and whether there would be coverage for the fire." At defendant's trial, Thenell testified that his practice included doing "coverage investigations for insurance companies."

Thenell actively participated in Oregon Mutual's investigation of defendant's claim, and he also retained others to assist him. Those persons included a private fire investigation firm to investigate the cause and origin of the fire, a forensics firm to examine and test electrical components in order to determine the cause and origin of the fire, and a private investigator to take witness statements and gather information. Thenell also ordered a credit check that revealed defendant's financial situation, including the fact that she was behind on her home mortgage.

Oregon Mutual denied defendant's claim approximately one month after the fire, and the state charged defendant with second-degree arson and attempted first-degree aggravated theft. After defendant was convicted of those crimes, the state sought an award of restitution on behalf of Oregon Mutual in the sum of $28,417.98, and the court awarded that sum.²

On appeal to the Court of Appeals, defendant objected to two categories of restitution that the trial court had awarded: (1) the attorney fees that Oregon Mutual had paid to Smith Freed, and (2) the expenses that Oregon Mutual had paid for the other investigators' time in investigating defendant's claim and in presenting grand jury and trial testimony. Alternatively, defendant argued that an award of the amounts that Oregon Mutual had paid investigators after it had denied her claim was impermissible. Ramos, 267 Or.App. at 174, 340 P.3d 703

. According to defendant, those portions of the restitution award violated limitations on liability drawn from civil law and applicable through the statutory definition of "economic damages," ORS 137.103(2), referenced in the criminal restitution statute, ORS 137.106.

The state responded that the challenged categories of restitution met the terms of ORS 137.106

and the definition of "economic damages" found in ORS 137.103(2) in that they were "objectively verifiable monetary losses" that "resulted from defendant's criminal activities." The Court of Appeals agreed. Id. at 178–79, 340 P.3d 703. In reaching that conclusion, the Court of Appeals rejected defendant's argument that "economic damages," as that term is used in ORS 137.106

, are limited to damages that would be recoverable in a civil action and therefore that they must be reasonably foreseeable. The court reasoned that, in amending the restitution statutes in 2005, the legislature had substituted the term "economic damages" for "pecuniary damages." "Pecuniary damages" had been defined to include only "damages that are recoverable in a civil action;" the definition of "economic damages" did not include that phrase. Id. at 175, 340 P.3d 703. Therefore, the court explained, a court must award as restitution all of a victim's expenses that meet the definition of "economic damages" without regard to whether such expenses would be recoverable in a civil action. Further, the court explained, ORS 137.106 requires that a court award all of a victim's economic damages that "result from" a defendant's criminal activities and that that requirement is met when the damages would not have been incurred "but for" the defendant's criminal conduct. Id. at 177, 340 P.3d 703. The court concluded that because, in the present case, it was undisputed that "but for defendant's false claim," Oregon Mutual would not have incurred any of the claimed expenses, the trial court had not erred in awarding them.

Id. at 177–80, 340 P.3d 703

. The court also reached the same conclusion as to the expenses that Oregon Mutual had incurred after it decided to deny defendant's claim, including the challenged charges relating to grand jury and trial testimony in defendant's criminal case. Id. at 178, 340 P.3d 703.

In this court, defendant takes issue with the premise from which the Court of Appeals reasoned—that "economic damages," as that term is used in ORS 137.106

, are not limited to damages that would be recoverable in a civil action. Defendant argues that when the legislature amended ORS 137.106 in 2005, it did not intend to alter the types of damages that are recoverable in restitution; the legislature intended only to change the terms it used to describe those damages. According to defendant, the legislature intended only to substitute the term "economic damages" for the term "pecuniary damages"; it did not intend to preclude application of civil law concepts that limit the recovery of such damages. Thus, defendant argues, a "but-for" connection between a defendant's crime and a victim's expenses is "necessary but not sufficient to establish that those expenses are economic damages." Defendant explains that, in a civil action, economic damages also must be reasonably foreseeable and contends that that same limitation applies to "economic damages" awarded as criminal restitution. Likewise, defendant contends, attorney fees and litigation costs are not awarded as damages in a civil action and therefore may not be awarded as damages in a restitution proceeding. Defendant argues that, because the trial court failed to apply those applicable civil law principles, the trial court erred in awarding Oregon Mutual the challenged expenses under ORS 137.106

.

The state adopts the reasoning of the Court of Appeals and contends that the causal connection between a defendant's criminal activities and a victim's damages required by ORS 137.106

is factual, "but-for" causation.³ Nevertheless, the state recognizes that "but-for" causation is not limitless. The state acknowledges that the "factual-causation test also includes a narrow exclusion for losses that are too remote or attenuated," but argues that reasonable foreseeability does not determine the applicability of that exclusion. The state contends that reasonable foreseeability is a civil law concept that is not incorporated in ORS 137.106. The same is true, the state argues, of the civil law principle that bars the recovery of attorney fees and litigation costs in civil actions, absent statutory or contractual authority. That principle, the state asserts, is inapplicable in a restitution proceeding.

Thus, this case requires us to determine whether a criminal restitution award is subject to two limitations on damages drawn from civil law: (1) that damages are limited to harms that result from reasonably foreseeable risks; and (2) that attorney fees and litigation costs are generally not recoverable unless authorized by statute or contract. For the reasons that follow, we conclude, first, that the statutory definition of "economic damages," as used in ORS 137.106

, does require, when appropriately raised, a reasonable foreseeability analysis; and second, that we will not apply the civil law bar on the recovery of attorney fees on the circumstances presented in this case.

We begin our analysis with the reasonable foreseeability limitation and the text of ORS 137.106(1)(a)

, which provides, as follows:

"When a person is convicted of a crime * * * that has resulted in economic damages, the district attorney shall investigate and present to the court, at the time of sentencing or within 90 days after entry of the judgment, evidence of the nature and amount of the damages. * * * If the court finds from the evidence presented that a victim suffered economic damages, in addition to any other sanction it may impose, the court shall enter a judgment or supplemental judgment requiring that the defendant pay the victim restitution in a

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