U.S. v. Barnette

• Decision Date: 07 January 1994
• Docket Number: No. 91-3206,91-3206
• Citation: 10 F.3d 1553
• Parties: , RICO Bus.Disp.Guide 8460 UNITED STATES of America, Plaintiff-Appellant, v. Larry D. BARNETTE, Defendant-Appellee.
• Court: U.S. Court of Appeals — Eleventh Circuit

Page 1553

10 F.3d 1553

62 USLW 2475, RICO Bus.Disp.Guide 8460

UNITED STATES of America, Plaintiff-Appellant, v. Larry D. BARNETTE, Defendant-Appellee.

No. 91-3206.

United States Court of Appeals Eleventh Circuit.

Jan. 7, 1994.

Douglas Letter, Appellate Staff, Civ. Div., Dept. of Justice, Washington, DC, for plaintiff-appellant.

Christine A. Clark, Charles W. Arnold, Jr., Jacksonville, FL, for defendant-appellee.

Appeal from the United States District Court for the Middle District of Florida.

Before TJOFLAT, Chief Judge, CARNES, Circuit Judge, and CLARK, Senior Circuit Judge.

CARNES, Circuit Judge:

In this civil action the Government seeks damages from Appellee Larry D. Barnette, who has previously been convicted and sentenced for defrauding the Government. The district court granted summary judgment for Barnette based on its holding that the Government is barred from recovering damages in excess of the amount of restitution Barnette was ordered to pay in the criminal proceeding. We now reverse the district court's decision and remand for further proceedings, including a determination of the total loss that Barnette's crimes caused the Government, so that the doctrine of United States v. Halper, 490 U.S. 435, 109 S.Ct. 1892, 104 L.Ed.2d 487 (1989), may be applied properly.

I. BACKGROUND

Between 1977 and 1981, Barnette and his associates defrauded the United States of millions of dollars through a complex conspiracy involving, among other things, a government contract for laundry services for the United States Army in Germany. The details of Barnette's many crimes are recounted in United States v. Barnette, 800 F.2d 1558, 1560-66 (11th Cir.1986) ("Barnette I "), cert. denied, 480 U.S. 935, 107 S.Ct. 1578, 94 L.Ed.2d 769 (1987). In 1984, a jury convicted Barnette on 17 counts, including racketeering, mail fraud, bribery, false statements, income tax evasion, and misapplication of government funds. The jury convicted several co-conspirators as well. Id. at 1560.

At sentencing, the United States sought an order requiring Barnette to pay restitution of $15 million, the Government's estimate of Barnette's excess profit. Barnette disputed the Government's estimate, contending that his illegal profit was at most $6.8 million. Without resolving the parties' dispute, the district court ordered Barnette to pay $7 million in restitution. The district court also sentenced Barnette to five years in prison and another five years on probation.

On direct appeal, we affirmed Barnette's convictions and, with one minor exception, the sentencing judge's restitution order. Barnette I, 800 F.2d at 1572. In doing so, we stated that "the evidence introduced at trial established that the conspiracy netted approximately fifteen million dollars in excess profits from the German laundry contract alone." Id. at 1571-72.

After Barnette's criminal conviction, the Government filed this civil action against Barnette and his co-conspirators, asserting claims under the Racketeer Influenced and Corrupt Organizations Act (RICO), 18 U.S.C.A. Sec. 1964 (1984 & Supp.1993), the False Claims Act, 31 U.S.C.A. Sec. 3729 (1983 & Supp.1993), and various common law theories. The Government's present claims arise from the same conduct for which Barnette was convicted. The Government alleges that Barnette's illegal actions caused the United States to suffer at least $15,750,153 in direct loss. At oral argument, the Government also asserted that it has incurred substantial investigation and prosecution costs as a result of Barnette's fraud. The Government now seeks between $18.1 million and $50.5 million from Barnette, depending upon the theory of recovery. (The Government's theories of recovery and prayers for relief are set out in the Appendix to this opinion.) At oral argument, the Government conceded that Barnette may offset the $7 million in restitution that he already paid as part of his criminal sentence against any new civil judgment.

The district court granted Barnette's motion for summary judgment against the Government. The court, through a judge different from the one who had sentenced Barnette, decided that the sentencing judge's restitution order constituted a finding of fact that the Government had lost only $7 million. The court reasoned that this sentencing finding estopped the Government from relitigating the amount of its damages. Citing United States v. Halper, 490 U.S. 435, 109 S.Ct. 1892, 104 L.Ed.2d 487 (1989), the district court concluded that, because Barnette had already been tried and sentenced, awarding the Government treble damages in this case would subject him to a second punishment in violation of the Double Jeopardy Clause.

Although numerous counts remain against other defendants, the district court certified its summary judgment order for immediate interlocutory review pursuant to 28 U.S.C.A. Sec. 1292(b) (1993), and we permitted the appeal. Because we conclude that the sentencing judge never determined the extent of the Government's loss, we now reverse the order granting summary judgment and remand for findings on the amount of the Government's loss and for reconsideration of Barnette's summary judgment motion in light of those findings and this opinion.

II. DISCUSSION

The Government contends on appeal that the district court erred in holding that the Double Jeopardy Clause ¹ and the doctrine of collateral estoppel bar recovery under this civil suit. We exercise plenary review over the district court's legal conclusions and review that court's findings of fact for clear error. E.g., Richardson v. Alabama State Bd. of Educ., 935 F.2d 1240, 1244 (11th Cir.1991); Balbirer v. Austin, 790 F.2d 1524, 1526 (11th Cir.1986).

A. DOUBLE JEOPARDY

The district court held that recovery in this civil suit would violate Barnette's double jeopardy rights. The court reasoned that, because the Government has already received full compensation from Barnette's restitution sentence, the present case was "nothing more than a further attempt to 'prosecute' the defendant civilly." We now consider whether the Government's effort to obtain further compensation in this case is such an attempt.

1. Sentencing Judge's Restitution Order

The district court concluded that the sentencing judge's $7 million restitution order constituted a "prior judicial determination" of the amount of the Government's loss. This conclusion underpins the remainder of the district court's summary judgment order, so we address it as a threshold issue.

The parties dispute whether we should treat the district court's interpretation of the sentencing judge's order as a finding of fact or a mixed finding of law and fact. We need not resolve this dispute. After reviewing this case, "we are left with a definite and firm conviction that a mistake has been committed." United States v. Roy, 869 F.2d 1427, 1429 (11th Cir.), cert. denied, 493 U.S. 818, 110 S.Ct. 72, 107 L.Ed.2d 38 (1989). Because the district court's conclusions are clearly erroneous, we must reverse even if the more deferential standard of review is applicable.

The sentencing judge carefully avoided making factual findings as to the total amount of the Government's loss. As initially drafted, Barnette's presentence report stated that the defendants' criminal activities earned them " 'approximately $15,000,000 in excess profits to which they were not entitled.' " Barnette objected to the original report's assessment of the evidence and asked the judge to leave the amount of the Government's loss undecided "[r]ather than conduct[ing] an extensive hearing on this point." The judge agreed. During the sentencing hearing, she ordered the probation department to revise the presentence report to set forth both the Government's and Barnette's position on this issue, and to state specifically that neither she nor the probation department would resolve the dispute. As revised according to the sentencing judge's express instructions, the final presentence report reads, in pertinent part:

The Government maintains that the evidence shows that defendants made false and fraudulent statements relating to costs that allowed $15,000,000 in excess profits. Defendants maintain that the evidence shows that the German laundry contract was a fixed price contract and that defendants were not limited to a specific profit amount of 10%. The defendants maintain that a profit of $6,851,134.00 over and above the 10% profit figure was made in fiscal years 1979, 1980 and 1981. The Court and Probation Office make no specific finding as to an amount of 'excess profits' that may or may not have been made under the German laundry contract. [emphasis added]

In the face of these events, Barnette argues that the sentencing judge determined the magnitude of the Government's loss later in the sentencing hearing. According to Barnette, when the sentencing judge decided "that the proper amount of restitution was $7 million, she implicitly rejected the government's calculation of loss." Barnette argues that his view of the judge's restitution order can be inferred from that order and is also supported by a statutory presumption.

We first reject Barnette's inference argument. Although Barnette offers one possible explanation of the sentencing judge's ruling, it is neither the only nor the most persuasive interpretation. An order of restitution is not a judicial determination of damages. Damages measure the amount of compensable loss a victim has suffered. Restitution, by contrast, is an equitable remedy, "subject to the general equitable principle that [it] is granted to the extent and only to the extent that justice between the parties requires ... ." Restatement of Restitution ch. 8, topic 2, introductory note, at 596 (1936); accord Williams v. Washington Metro. Area Transit Comm'n, 415 F.2d 922, 944 (D.C.Cir.1968) ("[R]estitution is not a matter of right, but is 'ex gratia, resting in the exercise of a sound discretion' ... .") (quoti...