U.S. v. Menza, 97-2770

• Decision Date: 25 February 1998
• Docket Number: No. 97-2770,97-2770
• Parties: UNITED STATES of America, Appellee, v. Philip J. MENZA, Defendant-Appellant.
• Court: U.S. Court of Appeals — Seventh Circuit

Page 533

137 F.3d 533

UNITED STATES of America, Appellee, v. Philip J. MENZA, Defendant-Appellant.

No. 97-2770.

United States Court of Appeals, Seventh Circuit.

Argued Jan. 20, 1998.

Decided Feb. 25, 1998.

Laura A. Przybylinski (argued), Office of the United States Attorney, Madison, WI, for Plaintiff-Appellee.

Reesa Evans (argued), Madison, WI, for Defendant-Appellant.

Before BAUER, COFFEY, and ROVNER, Circuit Judges.

BAUER, Circuit Judge.

Philip J. Menza pled guilty to a three-count information, charging him with possession of three different listed chemicals with intent to manufacture a controlled substance, in violation of 21 U.S.C. § 841(d)(1). The district court held a sentencing hearing and sentenced Menza to 37 months in prison for each count, to run concurrently, and to be followed by three years of supervised release for each count, also to run concurrently. In addition, the district court ordered Menza to pay restitution to the victims of his crimes as authorized by the Victim and Witness Protection Act, 18 U.S.C. §§ 3663, 3664. Menza does not challenge his sentence; rather, he appeals the specific amount of restitution that the district court ordered him to pay and argues that the district court abused its discretion by: (1) ordering restitution to the victims of his criminal conduct for losses they incurred which were not directly related to his offenses of conviction; (2) ordering restitution for losses not authorized by the Victim and Witness Protection Act; and (3) imposing restitution in light of his inability to pay. For the reasons set forth below, we affirm in part, vacate in part, and remand this case to the district court for further proceedings.

Background

On December 8, 1996, fire rescue personnel were called to an apartment building at 350 West Washington Avenue in Madison, Wisconsin. The Madison Police Department also dispatched a police officer to the building. Officer Dale Reuter entered the apartment building and, on the fifth floor, found a man, later identified as the defendant Philip Menza, lying on the floor in the hallway outside of his apartment surrounded by firefighters. Menza was complaining that he could not breathe. An ambulance was called, and Menza was taken to the hospital.

Officer Reuter then entered the apartment, which had a strong odor, and discovered some type of laboratory and chemical set-up, which included beakers, tubing, and some funnels. He found some bottles on the floor in the bathroom and boxes containing similar bottles outside of the bathroom. He also noticed a crushed can with the word "ether" on it and some white powder on the floor in the doorway of the apartment.

Officer Reuter called for back-up, and the Madison Fire Department Hazardous Incident Team ("HIT") later arrived at the scene. HIT entered the apartment and identified one potentially explosive chemical which was not securely capped. A member of HIT capped that open bottle, and the team then ensured that all other bottles of chemicals were properly and securely capped and sealed. After sealing all of the bottles, HIT then checked for any explosive pockets in the apartment. The team was unable to find any hazardous areas or explosive pockets and deemed the apartment safe from potential explosion or hazard. Finally, HIT left the scene after ensuring that the apartment door was closed and secured until other law enforcement officers returned with a search warrant.

Later, Special Agent Jeffrey Boobar of the Department of Justice, Drug Enforcement Agency ("DEA") and a Clandestine Laboratory Enforcement Team (the "Team") entered the apartment pursuant to a warrant, searched the premises, and began to dismantle the laboratory equipment and chemical set-up and to remove various items from Menza's apartment. Agent Boobar explained that according to DEA regulations, the only items the Team is able to keep are items that it deems either finished products to be used as evidence or unknown liquid samples which are not labeled or cannot be identified. Otherwise, all other items, including all equipment and chemicals, whether toxic/hazardous or not, are removed from the premises and turned over to an independent company for destruction and disposal. In compliance with these regulations, the DEA and the Team turned over all other chemicals and all equipment to Advanced Environmental Technical Services ("AETS"), a hazardous waste disposal company. Although the items turned over to AETS were deemed hazardous and toxic by the Team, some were common household items, which had no association with any criminal activity. Thereafter, AETS forwarded a bill to the DEA for $10,625.42, reflecting the cost it incurred from destroying and disposing of the items collected from Menza's apartment.

Meriter Retirement Services ("Meriter"), the owner of the building and apartment where Menza lived and set up his laboratory, also incurred clean-up and replacement costs after the police and DEA finished inspecting the apartment and removing the above-mentioned items. Meriter also submitted an invoice to the government, indicating that it had suffered a total loss of $13,878.12, which included the costs incurred for attorneys' fees.

Menza remained in the hospital for several days. Upon his release, he was taken to Dane County Jail where he was served by the state with a complaint, alleging several drug-related charges. On January 29, 1997, Menza was indicted by a federal grand jury on similar drug-related charges, including manufacturing amphetamines and keeping a drug in the house. As a result of the federal charges, the state complaint was dropped. However, before trial on April 18, 1997, an information was filed in federal court against Menza, alleging possession of three listed chemicals with intent to manufacture a controlled substance. On that same day, Menza pled guilty to the charges alleged in the information, and the indictment was dismissed.

The district court then held a two-day sentencing hearing. At the hearing, testimony established that, in compliance with DEA regulations, once the Team had finished its inspection, all items were automatically removed from the apartment and turned over to AETS for disposal. The bill from AETS for $10,625.42 was presented by the government as evidence of the cost the DEA incurred from the destruction and disposal of the items confiscated from Menza's apartment. This bill, however, did not itemize in any manner or distinguish between the cost for disposal of the listed chemicals for which Menza was convicted and the cost which resulted from the disposal of all other non-criminal and non-related items and materials that were confiscated from Menza's apartment by the DEA.

Similarly, the government also presented the bill from Meriter as evidence of losses incurred by another victim of Menza's crimes. The total amount submitted by Meriter was $13,878.12, which included clean-up costs, furniture and appliance replacement costs, and attorneys' fees. The district court properly excluded attorneys' fees from the restitution order, which reduced the bill to $6,020.17. The court further reduced the costs for furniture and appliance replacement by one-half to account for daily use and depreciated value, which reduced the total amount of recovery for Meriter to $5,205.00.

Lastly, the district court concluded, over defense counsel's objections, that Menza had the means and potential earning ability to pay restitution to his victims. Accordingly, on June 30, 1997, the district court sentenced Menza to 37 months in prison, to be followed by three years of supervised release. Pursuant to the Victim and Witness Protection Act ("VWPA"), the district court also ordered Menza to pay restitution to the victims of his crimes--$10,625.42 to the DEA and $5,205.00 to Meriter, for a total restitution award of $15,830.42. Judgment was entered on July 2, 1997, and Menza filed a timely notice of appeal on July 10, 1997.

Menza specifically admits and understands his responsibility that he owes proper restitution to the victims of his offenses for their recoverable losses as defined by (and limited by) the VWPA. On appeal, Menza does not challenge the fact that the district court ordered him to pay restitution, but he argues that some of the costs that the DEA and Meriter claim as losses involve conduct which is not directly related to his specific offenses of conviction. Additionally, the defendant contends that the restitution order seems to include compensation to the victims for losses which are not authorized by the VWPA. Menza, therefore, argues that the amount of restitution should be reduced to reflect the proper calculation of losses to be recovered by each victim. Menza finally asks this court to determine whether the district court abused its discretion by imposing restitution in light of his inability to pay. With these facts in mind, we now turn to the issues presented for review.

Analysis

The VWPA specifically authorizes a district court sentencing a defendant convicted of an offense under 21 U.S.C. § 841 to "order ... that the defendant make restitution to any victim" of his crime. See 18 U.S.C. § 3663(a)(1)(A). The decision to order restitution pursuant to the VWPA lies within the discretion of the district court, and we review that decision for an abuse of discretion. United States v. Ross, 77 F.3d 1525, 1552 (7th Cir.1996); United States v. Murphy, 28 F.3d 38, 40 (7th Cir.1994).

Menza argues that he does not have to pay restitution to the victims of his crimes in excess of the losses directly caused by his specific criminal conduct involved in the offenses of conviction. He contends that the district court failed to determine the appropriate amount of restitution. Menza focuses on the crimes charged in the information: three counts of possession of a listed chemical with intent to manufacture a controlled substance, in violation of 21 U.S.C. § 841(d)(1), to which he...