Is Restitution Moot if Civil Settlement and Release?

It is not uncommon for our clients to face a civil lawsuit arising out of the same event that results in an arrest and a criminal case.  Our clients inevitably want to know if the victim can be awarded money in the criminal case and in the civil case. 

Our answer is yes, but not for the same damages, which is often confusing to our clients until we explain the different forms of damages (i.e., medical expenses, property damage, rental car expenses, lost earnings, loss of earnings capacity, pain and suffering, as well as other types of damages).

While driving with a blood alcohol level of 0.14%, Nolan Takao Nonaka ran a red light in Ventura County and crashed into another vehicle, severely injuring its occupants. 

Ame S. suffered a fractured pelvis.  Her 14-year old, Lyla S., suffered multiple injuries, including a lacerated spleen and a ruptured kidney, as well as back injuries and other minor injuries.  Lyla S. was hospitalized.

In criminal court (Ventura County Superior Court), Mr. Nonaka entered a plea bargain, which included his acknowledgement that he would be obligated to pay restitution in an amount to be determined in a restitution hearing in criminal court.

In the meantime, Ame S. and Lyla S. hired a personal injury attorney on a contingency basis who sued Mr. Nonaka in civil court and his insurance company paid $235,000 to Ame S. and $200,000 to Lyla S.

As part of the civil settlement, Ame S. and Lyla S. signed a general release in which they agreed to “release, discharge and acknowledge as fully paid and compromised all claims, demands and causes of action against” Mr. Nonaka and his insurance carrier.

Nobody asked the State of California or its agent, the Ventura County District Attorney’s Office, if they agreed to this settlement.

Prior to the restitution hearing in criminal court, the People requested that the judge order Mr. Nonaka to pay restitution for attorney fees and costs.

At the hearing, Mr. Nonaka’s attorney agreed that Ame S. may be able to recover attorney fees and costs, but the victims were barred from any other payments because of the civil settlement and the general release they each signed waiving any other claim against Mr. Nonaka.

The judge agreed with Mr. Nonaka’s attorney and denied not only the victim’s any additional payments, but it also denied Ame S.’s attorney fees and costs.

The People appealed to the Second Appellate District, which reversed the trial court judge.  The Second Appellate District began with explaining that in criminal cases, restitution is constitutionally required “in every case in which a victim suffered economic loss as a result of the defendant’s conduct.” Cal. Const., art. 1, § 28(b)(13)(B) and Penal Code § 1202.4(f).  Actual and reasonable attorney fees are among the determined economic losses properly addressed by a restitution order.  The civil settlement could not discharge Mr. Nonaka of his constitutional obligation to pay the victim’s attorney fees. 

However, settlement payments made to a victim on the defendant’s behalf must be used to offset the restitution award “to the extent that those payments are for items of loss included in the restitution order.” People v. Bernal (2002) 101 Cal.App.4th 155, at 168. 

Nonetheless, in People v. Pinedo (1998) 60 Cal. App. 4th 1403, the court held that a contingency fee paid to the victim’s attorney who obtained a civil settlement from defendant’s insurance carrier was properly included in the restitution amount ordered.

Here, the Second Appellate District ordered Mr. Nonaka to pay $58,750 in attorney fees and $2,824.44 in costs for Ame.  This was a 25% contingency fee that Ame had paid from the settlement from the insurance carrier. 

We note that this is a rather low contingency fee and many personal injury attorneys charge 33% or even 40% for such a settlement amount.  In a way, Mr. Nonaka was fortunate that the victim’s attorney was cheap.

For more information about restitution, please click on the following articles: