Tyler v. Commonwealth
| Decision Date | 26 July 2022 |
| Docket Number | Record No. 0993-21-2 |
| Parties | Catherine TYLER v. COMMONWEALTH of Virginia |
| Court | Virginia Court of Appeals |
Bryan Jones (Bryan J. Jones, LLC, on brief), for appellant.
Sharon M. Carr, Assistant Attorney General (Jason S. Miyares, Attorney General, on brief), for appellee.
Present: Judges Russell,* Ortiz and Raphael
OPINION BY JUDGE DANIEL E. ORTIZ
Catherine Tyler pleaded guilty under Code § 18.2-111 to one count of embezzlement after she stole nearly $650,000 from the law firm where she worked as a bookkeeper for seventeen years. At her sentencing hearing, the firm requested restitution in an amount $125,000 greater than the amount stolen for expenses related to Tyler's embezzlement. Tyler objected. The circuit court awarded the amount Tyler stole and the additional $125,000. Tyler assigns error to part of the circuit court's restitution award of the $125,000 because she argues that some expenses awarded were not directly caused by her crime. We agree with Tyler because some of the expenses were too attenuated from her crime. As a result, we reverse in part and affirm in part.
BACKGROUND
Tyler began working for the law firm Dygert, Wright, Hobbs & Hernandez, PLC in 2003 as a bookkeeper. The firm tasked Tyler with "managing the law firm's financial and accounting functions including its trust and operating accounts." Tyler's duties also included receiving and depositing money, "applying client payments to outstanding invoices, accounting for cost advances and reimbursement, and paying firm bills." She also later became the firm's real estate paralegal and was responsible for "preparing real estate transactions for closings, communicating with lenders and title insurance companies, making post-closing monetary disbursements, and performing account reconciliations."
Beginning sometime in or before 2012, Tyler started embezzling funds from the firm. The firm did not discover Tyler's embezzlement until January 2020, despite having independent professional obligations requiring it to manage and oversee its accounts and employees. By the time the firm had caught her, Tyler had drained most of the firm's accounts so that each account either had a negative balance or about $1,000 to $5,000 left. She also stole a $300,000 check intended for a real estate client (payoff check). The firm could not determine how much Tyler stole and realized it needed a forensic accountant. The firm then had to switch forensic accountants because of the complexity of the embezzlement. After the forensic accountant reviewed the firm's records, he determined the firm was missing $648,729.79. The accountant could track $560,000 of the missing amount through bank records, but the firm only had records dating back to 2012. The accountant determined that an additional $88,000 was also missing but could not "tie [it] to a specific transaction."
At Tyler's sentencing hearing, the firm requested as restitution the embezzled amount and certain expenses totaling about $125,000. These expenses included: (1) office expenses totaling $922.02, which included costs to order new checks for the new accounts the firm opened, change the office locks, and pay an overdraft fee (office expenses); (2) malpractice and real estate insurance costs totaling $14,060.50, which related to a tail end coverage fee and one of the firm's insurers’ legal fees after the insurer sued the firm (insurance costs); (3) legal fees totaling $14,622.50 arising from a lawsuit a client brought against the firm, the firm's lawsuit against Tyler, and other unspecified legal fees (legal fees); (4) forensic accounting costs totaling $34,493.75, including costs related to calculating the embezzled amount (forensic accounting fees); (5) the Virginia State Bar sanction fee and audit costs totaling $11,216.30, resulting from a VSB complaint which alleged the firm failed to maintain certain records, reconcile its accounts, and oversee nonlawyer employees (VSB fees); and (6) anticipated future costs totaling $29,075, which included costs for VSB-required audits every six months and for the forensic accountant's testimony (anticipated future costs). Tyler objected to each of these expenses except the forensic accountant's testimony costs.
The circuit court sentenced Tyler to twenty years in prison with eight years’ active incarceration. It also ordered Tyler to pay $499,537.25 in restitution. That restitution amount included the $648,729 Tyler embezzled and the $125,808.25 in additional expenses minus $275,000 Tyler had paid back to the firm as part of the parties’ civil settlement. Tyler moved to reconsider, but the circuit court denied the motion. Tyler appealed.
ANALYSIS
The circuit court abused its discretion by awarding certain costs, but not others, over the funds embezzled as restitution. Some costs awarded were too attenuated because the Commonwealth failed to prove the costs were directly related to Tyler's crime or the firm had independent duties related to account management and employee supervision.
I. Standard of Review
We review a trial court's restitution award for abuse of discretion. Slusser v. Commonwealth , 74 Va. App. 761, 774, 872 S.E.2d 223 (2022). "On appeal, where the restitutionary amount is supported by a preponderance of the evidence and is ‘reasonable in relation to the nature of the offense,’ the determination of the trial court will not be reversed." Burriesci v. Commonwealth , 59 Va. App. 50, 55-56, 717 S.E.2d 140 (2011) (). Yet " court by definition abuses its discretion when it makes an error of law.... Porter v. Commonwealth , 276 Va. 203, 260, 661 S.E.2d 415 (2008) (alterations in original) (quoting Koon v. United States , 518 U.S. 81, 100, 116 S.Ct. 2035, 135 L.Ed.2d 392 (1996) ).
’ " Rollins v. Commonwealth , 37 Va. App. 73, 79, 554 S.E.2d 99 (2001) (quoting Timbers v. Commonwealth , 28 Va. App. 187, 193, 503 S.E.2d 233 (1998) ). Further, we must look at whether a trial court's restitution award was guided by an erroneous conclusion that it could include indirect damages or losses in the award. See Burriesci , 59 Va. App. at 56-57, 717 S.E.2d 140 ().
II. Restitution Generally
" ‘Restitution’ is ... ‘a restoration of something to its rightful owner: the making good of or giving an equivalent for some injury (as a loss of or damage to property).’ " Howell , 274 Va. at 740, 652 S.E.2d 107 (quoting Restitution , Webster's Third New International Dictionary (1993)). Courts often use restitution in a criminal context "to make the victim whole by compensating him for losses caused by the offense for which the defendant was convicted." Fleisher v. Commonwealth , 69 Va. App. 685, 691, 822 S.E.2d 679 (2019). A court may order a defendant to make restitution "for damages or loss caused by the offense for which conviction was had." Code § 19.2-305(B). Further, Code § 19.2-305.1(A) requires that a defendant receiving probation or a suspended sentence for a crime "which resulted in property damage or loss" make partial restitution for that property damage or loss.
This Court has interpreted the restitution code sections to confer wide latitude to trial courts using restitution as a remedial tool. Ellis v. Commonwealth , 68 Va. App. 706, 712, 813 S.E.2d 16 (2018). Still, the trial court's discretion is limited in two ways. First, restitution requirements "must be reasonable in relation to the nature of the offense, the background of the offender and the surrounding circumstances." Deal v. Commonwealth , 15 Va. App. 157, 161, 421 S.E.2d 897 (1992). Next, the ordered restitution must be for loss or damage directly caused by the defendant's offense. See Howell , 274 Va. at 741, 652 S.E.2d 107 ; Ellis , 68 Va. App. at 715, 813 S.E.2d 16.
The directly-caused-by constraint arises from Virginia courts’ interpretation of Code § 19.2-305(B) ’s "caused by" language. The Supreme Court of Virginia has read that language to prevent courts from imposing losses that are too attenuated from the offense. Howell , 274 Va. at 739, 741, 652 S.E.2d 107 (); Ellis , 68 Va. App. at 715-16, 813 S.E.2d 16 (). In adopting the attenuation language, the Howell Court relied on State v. Chambers , 36 Kan.App.2d 228, 138 P.3d 405, 414-15 (2006), and noted that the victim in Chambers installed the security system because of her concern that the defendant would reoffend. Howell , 274 Va. at 741, 652 S.E.2d 107.1 We have interpreted Howell to bar recovery of costs incurred to prevent future criminal activity. Salazar v. Commonwealth , 66 Va. App. 569, 584, 789 S.E.2d 779 (2016).
Moreover, a loss or damage is not too remote if a defendant's offense is a "but for" cause of the harm. Shelton v. Commonwealth , 66 Va. App. 1, 8, 781 S.E.2d 750 (2016) (...
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