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Name: People v. Petronella
Case #: G044628
Court: CA Court of Appeal
District 4 DCA
Division: 3
Opinion Date: 07/17/2013
Summary

Trial court’s reliance on irrelevant factors and failure to consider all of the evidence presented to it requires reversal of victim restitution award. Defendant, owner of several construction businesses, was convicted of 33 counts of violating Insurance Code section 11880, subdivision (a), by repeatedly under reporting payroll, which reduced the workers’ compensation premiums owed to the State Compensation Insurance Fund (SCIF). He was sentenced to ten years in state prison and ordered to pay $500,000 in victim restitution. Defendant raised numerous issues on appeal; both parties sought review of the victim restitution order. Held: Restitution order reversed. Under Penal Code section 1202.4, a victim is entitled to recovery of losses incurred as a result of defendant’s criminal conduct. The SCIF is a victim and its loss of premiums is a recoverable loss. Here, the trial court found that from the evidence presented regarding restitution owed, it could not determine the victim’s actual loss. It awarded restitution in the amount of the jury finding on an enhancement—that the loss exceeded $500,000. The Court of Appeal found the award to be arbitrary because the trial court failed to consider all the evidence and relied on irrelevant factors, such as SCIF’s right to seek civil recovery, the substantial fine it would impose on defendant at sentencing, and SCIF’s possible contribution to the loss of premiums. The trial court had before it evidence it could have used to determine the victim’s losses. Instead, it chose a figure that was less than what the jury found to have been SCIF’s losses. The matter was remanded for a restitution hearing.

The evidence was sufficient to prove the violations of Insurance Code section 11880, subdivision (a). Defendant incorrectly claimed the prosecution must present evidence of the correct insurance premium to support a conviction under the statute. The prosecution need only prove the defendant knowingly made a false oral or written statement, which was shown by defendant’s underreporting payroll.

Defendant’s felony convictions under Insurance Code section 11880, subdivision (a) did not violate equal protection. Defendant claimed a denial of equal protection because Labor Code section 3700.5, subdivision (a) makes it a misdemeanor not to secure worker’s compensation insurance. Defendant forfeited this argument by not raising it below. Additionally, defendant is not similarly situated as section 3700.5 punishes those who fail to obtain insurance coverage, while section 11880, subdivision (a) targets those who knowingly conceal a fact material to calculation of insurance premiums.

Defendant’s prosecution was not barred by the statute of limitations. The statute of limitations for an Insurance Code section 11880 violation is four years from discovery of the commission of the offense. Defendant’s prosecution commenced on April 29, 2009. He failed to establish that SCIF should have suspected he was underreporting payroll before September 2006.

The court did not err in denying pretrial discovery. In support of his statute of limitations argument, defendant sought SCIF e-mails regarding his insurance policies from September 2000 to August 2009. SCIF claimed attorney-client privilege as to a number of the e-mails. Except as to two e-mails, the trial court sustained SCIF’s privilege claim without conducting an in camera review. On appeal, defendant argued that the ruling violated his constitutional rights to confrontation and due process. The court did not err in finding defendant was not entitled to have it conduct an in camera review of the e-mails claimed to be covered by the attorney-client privilege. Evidence Code section 915, subdivision (a) bars disclosure of information claimed to be privileged in order to rule on the claim of privilege. Additionally, defendant’s confrontation and due process rights did not entitle him to pretrial discovery of privileged information. (People v. Hammond (1997) 15 Cal.4th 1117; People v. Gurule (2002) 28 Cal.4th 557.)

There was no sua sponte duty to instruct on the mistake-of-fact defense. A mistake-of-fact defense may negate the requisite criminal intent element of a crime. This is not a special defense requiring a sua sponte instruction. In any event, there was insufficient evidence to support giving a mistake-of-fact instruction.

Penal Code section 654 did not bar concurrent sentences on some of the Insurance Code section 11880 violations. The evidence reflected that defendant submitted false monthly payroll reports over an extended period of time. He had an opportunity to reflect prior to submitting these documents. Thus, section 654 did not apply.