Diderickson v. State

506 P.3d 519

James DIDERICKSON and Allan Bruun, Petitioners,

v.STATE of Utah, Respondent.

No. 20190478

Supreme Court of Utah.

Heard September 13, 2021

Filed January 27, 2022

Karra J. Porter, Kristen C. Kiburtz, Salt Lake City, for petitioner Diderickson.

Clifton W. Thompson, Bountiful, for petitioner Bruun.

Jeffrey S. Gray, Jacob S. Taylor, Sean D. Reyes, Salt Lake City, for respondent.

Justice Pearce authored the opinion of the Court in which Chief Justice Durrant, Associate Chief Justice Lee, Justice Petersen, and Judge Wilcox joined.

On Certiorari to the Utah Court of Appeals

Justice Pearce, opinion of the Court:

INTRODUCTION

¶1 A jury convicted James Diderickson and Allan Bruun of twelve counts of theft in connection with a real estate deal they entered into with Kerry and Bobbie Posey. As part of Diderickson's and Bruun's sentences, a district court considered how much to order for complete and court-ordered restitution.

¶2 Diderickson and Bruun argued to the district court that they should not have to pay restitution because they had settled the Poseys’ civil claims against them before they had been criminally charged. As part of that settlement, the Poseys released all claims they possessed against Diderickson and Bruun. Diderickson and Bruun also argued that the district court could not base a restitution order on claims for which the Poseys had already been remunerated. The district court disagreed with Diderickson's and Brunn's contention that the Poseys had been compensated and ordered restitution. The court of appeals affirmed, and the complete restitution order transformed into a civil judgment against Diderickson and Bruun.

¶3 Diderickson and Bruun then filed a satisfaction of judgment in hopes of extinguishing that judgment. The district court rejected their attempt, and the court of appeals again affirmed. Diderickson and Bruun petitioned for certiorari arguing that the court of appeals erred when it concluded that a victim's pre-conviction release of claims offsets a complete restitution order only to the extent it "demonstrably compensates" the victim. Diderickson and Bruun also assert that the court of appeals incorrectly concluded that they were not entitled to any offset based on the value the settlement agreement bestowed upon the Poseys. We affirm the court of appeals, but we remand to allow the district court to correct a math error that the State highlighted in its briefing.

BACKGROUND

¶4 The Poseys owned a twenty-nine-acre piece of undeveloped land that they hoped to develop to fund their retirement. Allan Bruun and James Diderickson (Petitioners) approached the Poseys with a plan to take the Poseys’ undeveloped land and turn it into a mix of commercial and residential properties.¹ This inspired the Poseys to sell the land to Equity Partners, LLC, a limited liability company the Petitioners owned. In exchange, the Poseys received a stake in a newly formed company, Tivoli Properties, LLC (Tivoli), and a promise of monthly payments.

¶5 As part of the transaction, Petitioners took out a $750,000 high-interest loan to fund the development, using the property as collateral. Petitioners used approximately $350,000 of the loan to pay off the existing mortgage and taxes on the property and deposited the remaining balance in Tivoli's operating account.

¶6 Petitioners initially met their monthly obligations to the Poseys, and the real estate venture seemed to move smoothly. Six months after the deal was signed, however, Petitioners told the Poseys that they could no longer afford the monthly payments. The Poseys wondered where the $400,000 had gone and asked for an accounting. Petitioners initially evaded the request.

¶7 The Poseys contacted the bank and discovered Tivoli's account balance had been reduced from about $400,000 to $1,083. Bank records indicated that Petitioners had withdrawn money on multiple occasions to cover expenses unrelated to the real estate venture with the Poseys.

¶8 After the Poseys learned about Tivoli's dire financial straits, Petitioners asked the Poseys to sign a $100,000 extension of the loan and indicated that without the extension the loan would foreclose. The Poseys demurred and instead negotiated an end of their relationship with the Petitioners. This culminated in a settlement agreement.

¶9 As part of the settlement, Petitioners gave title to the property back to the Poseys. Petitioners also paid the Poseys $174,000. In return, the Poseys paid $25,000 to Equity Partners and released the company, and Petitioners, of all claims related to the transaction and the management of Tivoli.

¶10 Approximately two and a half years after the Poseys and Petitioners entered into the settlement agreement, the State criminally charged Petitioners for using Tivoli's funds on projects unrelated to the development of the Poseys’ property. A jury convicted Petitioners on twelve counts of theft and one count of engaging in a pattern of unlawful activity. Each count of theft related to a separate check Petitioners had used on unrelated projects.

¶11 The district court ordered a hearing to determine the size of complete and court-ordered restitution.² Before the hearing, Petitioners submitted a brief in which they made their position on restitution clear. According to Petitioners, the "Court's task [was] simple. The Poseys [were] limited ... to a recovery of zero dollars ($0.00), as they entered into a Settlement Agreement with [Petitioners]." Petitioners emphasized this argument at the restitution hearing, explaining that because of the settlement agreement, there were "two independent reasons" why the court must find Petitioners owed no restitution.

¶12 Petitioners first argued that the court must conclude that there was no need for court-ordered restitution because the settlement agreement had already compensated the Poseys for any harm their conduct had caused. Petitioners next contended that, when fixing the amount of court-ordered restitution, a district court has discretion to award only up to the amount of complete restitution—an amount Petitioner asserted must equal zero.

¶13 More specifically, Petitioners explained that the settlement agreement had already repaired the harm they had inflicted on the Poseys because Petitioners had greatly increased the value of the land by securing county approval for the proposed development. Petitioners also valued the property that had been returned to the Poseys based on the valuation of a small piece of the property that Petitioners had sold. Petitioners argued that the increase in value more than compensated the Poseys for the funds Petitioners had misspent. Petitioners claimed that the court should therefore conclude that the Poseys had been made whole and that complete restitution equaled zero dollars.³

¶14 The State countered that Petitioners’ valuation was speculative and based upon insufficient data. The State instead pressed that restitution should be based on the total amount the Poseys were to be paid under the purchase agreement. The State reasoned that the purchase agreement represented the price an actual buyer had been willing to pay for the entire parcel. The State additionally argued that the Poseys had expected to receive $3.5 million from the transaction and that they would have received it but for the Petitioners’ malfeasance. Using the $3.5 million figure as a baseline, the State discounted what the Poseys received in the settlement and proposed $1,932,369 as the appropriate amount of restitution.

¶15 The court noted that it was "somewhat persuaded" that the settlement agreement had provided partial compensation to the Poseys. The court reasoned that, at the very least, the Poseys "thought they were getting a fair deal out of it at that point." Accordingly, the court did not award the $1,932,369 in restitution the State sought.

¶16 But the court was also not persuaded by Petitioners’ arguments. The district court concluded that any increase in value of the Poseys’ land flowing from Petitioners’ efforts to prepare it for development was speculative and could not serve as persuasive evidence of an offset of the harm Petitioners had caused by depleting Tivoli's bank account for unrelated expenses. Instead, the court decided the best way to calculate the Poseys’ losses was to rely on the jury's finding that the sum of the twelve checks represented the amount of money Petitioners stole from the Poseys. And the court chose to base restitution on those checks. The district court accordingly ordered $189,574.33 in restitution.⁴

¶17 Petitioners appealed the restitution order. Before the court of appeals, they argued that the settlement agreement barred the entry of a restitution order. State v. Bruun (Bruun I ), 2017 UT App 182, ¶ 82, 405 P.3d 905. They also contended that even if the settlement agreement did not prohibit restitution entirely, the restitution order would lead to a double recovery because the settlement agreement had already compensated the Poseys. Id. ¶ 87.

¶18 The court of appeals disagreed and concluded that Utah caselaw indicates that "a civil settlement and release of claims d[oes] not bar the district court from imposing restitution as part of the criminal sentence." Id. ¶ 85. The court of appeals was likewise unmoved by Petitioners’ double recovery argument. It held that in "the case of restitution, a reviewing court will not disturb a district court's determination unless the court exceeds the authority prescribed by law or abuses its discretion." Id. ¶ 87 (quoting State v. Laycock , 2009 UT 53, ¶ 10, 214 P.3d 104 ). The court of appeals ruled it could not fault the district court for basing its restitution calculation on the stolen checks nor for rejecting Petitioners’ claim that their debt was paid based on various property valuations, which the district court deemed unreliable. "It is well within a district court's broad discretion in determining criminal restitution to reject a party's valuation contentions on the...