The civil disgorgement statute applicable to unlicensed contractors (Bus. & Prof. Code, § 7031) does not control the amount of victim restitution in a criminal proceeding. Walker entered a no contest plea to misdemeanor contracting without a license (Bus. & Prof. Code, § 7028, subd. (a)). The trial court ordered him to pay restitution for the actual economic loss suffered by the victim, but denied the prosecution’s request for a full refund of the victim’s payment to Walker and for attorney fees. On the prosecution’s appeal, the appellate division of the superior court reversed, finding the civil disgorgement statute (Bus. & Prof. Code, § 7031) entitled the victim to full restitution of all money paid to Walker, and also awarded her attorney fees. (People v. Walker (2016) 6 Cal.App.5th Supp. 38). Walker’s petition for writ of mandate was denied. The California Supreme Court granted review, and directed the Court of Appeal to vacate its judgment and hear the matter. Held: Granted in part. “Restitution is constitutionally and statutorily mandated in California.” Full restitution for all economic losses suffered by the victim as a result of the defendant’s criminal act should be ordered in criminal cases (Pen. Code, § 1202.4, subd. (f)). A person who uses an unlicensed contractor is authorized to sue and recover all compensation paid to the unlicensed contractor (Bus. & Prof. Code, § 7031). A person who used the services of an unlicensed contractor is a victim of a crime and is therefore entitled to restitution. (Bus. & Prof. Code § 7028, subd. (h); Pen. Code, § 1202.4, subd. (f)). However, the appellate division’s reliance on section 7031 to support full victim recovery was error because that section is restricted to civil actions. The purpose of the civil remedy is to deter unlicensed contractors by depriving them of all monetary benefits for unlicensed work. The criminal restitution statute serves to compensate victims for all actual economic losses. The Legislature did not intend section 7031 to fix the amount of restitution in criminal cases. The court thus disapproved of the decision in Walker, supra, 6 Cal.App.5th Supp. 38, to the extent it relied on the civil disgorgement statute to impose criminal restitution.

The appellate division did not err in finding the trial court abused its discretion by not awarding the victim attorney fees incurred in the civil action. At trial, the prosecution sought an order for attorney fees the victim expended in her civil action against Walker. They argued the victim hired an attorney to recover her economic losses and to prevent further economic loss resulting from Walker’s unlicensed activities. Under Penal Code section 1202.4, subdivision (f)(3)(H), “economic loss” for purposes of victim restitution includes “attorney’s fees and other costs of collection” to recover economic damages sustained by the victim as a result of criminal activity. Thus, the appellate division of the superior court did not err in finding the trial court abused its discretion by denying an award of attorney fees.

The full opinion is available on the court’s website here: http://www.courts.ca.gov/opinions/documents/B280100.PDF