IN THE COURT OF APPEAL OF THE STATE OF CALIFORNIA SECOND APPELLATE DISTRICT DIVISION ONE
May 11, 2011
THE PEOPLE, PLAINTIFF AND RESPONDENT,
LARRY WADE BUTLER, DEFENDANT AND APPELLANT.
APPEAL from a judgment of the Superior Court of Los Angeles County. Kathleen Blanchard, Judge. (L.A. Super. Ct. No. MA045858)
The opinion of the court was delivered by: Rothschild, J.
CERTIFIED FOR PARTIAL PUBLICATION*fn1
Affirmed in part; modified in part.
In this case of first impression we hold that Penal Code section 550, subdivision (a)(2), making it a felony to fraudulently "present multiple claims for the same loss or injury, including presentation of multiple claims to more than one insurer," is not limited to the presentation of multiple claims to more than one insurer but also applies to the fraudulent presentation of multiple claims for the same loss or injury to one or more individuals whether or not they are insured for the loss or injury. Therefore, we affirm defendant's conviction under Penal Code section 550, subdivision (a)(2) for presenting multiple fraudulent claims for personal injury to the manufacturers of electric shavers. We also affirm defendant's convictions of theft and perjury and the imposition of a restitution fine. We modify the judgment by staying the sentence on the theft conviction under Penal Code section 654.
FACTS AND PROCEEDINGS BELOW
Between November 2007 and August 2008, defendant Larry Wade Butler filed four small claims actions against the manufacturers of electric razors. In each case he falsely claimed that the manufacturer's razor caused injuries to his face.
In the first case, filed in November 2007, Butler claimed his face was injured when he shaved with a Gillette electric razor. Butler sent Gillette photographs of his face and a statement from a dermatologist regarding the cost of treating Butler's skin. Rather than contest Butler's action, Gillette settled the case for the sum of $4,700. It sent Butler a check in that amount which he cashed.
Butler next filed a small claims action against Phillips Electronics in January 2008. In his complaint he alleged he purchased a Phillips electric razor that caused scars to his face. Butler sent a letter to Phillips containing the same allegations and documents from the same dermatologist showing that the cost of Butler's proposed medical treatment would exceed $5,000, the jurisdictional limit of the small claims court at the time. Timothy Windham, the attorney who represented Phillips in the matter, explained that claims the size of Butler's were not turned over to Phillips' insurance carrier but handled by Phillips in-house or through a third party administrator. In this case, the third party administrator retained Windham's firm to handle Butler's claim. Based on the complaint and other documents Phillips instructed Windham to negotiate a settlement with Butler. The matter was settled for the sum of $4,800. Butler was handed a check in that amount at Windham's office.
In April 2008, Butler filed a small claims action alleging he sustained injuries after he purchased and used an electric razor manufactured by Schick. Again Butler sent the company photographs of his alleged injuries and copies of the documents from the dermatologist. Butler subsequently withdrew this action.
Finally, in May 2008, Butler filed a small claims action against Panasonic. His complaint alleged the same facial injuries as in the previous suits and claimed these injuries resulted from his use of a Panasonic electric razor. Panasonic did not settle this lawsuit because its attorney discovered, from talking to insurance adjusters for other companies, that Butler had made the same claims against their insureds. When Panasonic's attorney confronted Butler with this information, Butler stated that he had made the previous claims because he was unsure who had manufactured the razor that caused him injury but once he discovered that the razor was manufactured by Panasonic he dismissed the other complaints. Panasonic's attorney testified that he was prepared to show documents in the small claims action establishing that Butler dismissed the prior lawsuits only after he received monetary settlements from the manufacturers. Butler, however, failed to appear for trial of the Panasonic suit and the court dismissed it.
A jury convicted Butler of one count of fraudulently presenting multiple claims for the same loss in violation of Penal Code section 550, subdivision (a)(2), one count of theft of personal property and three counts of perjury.*fn2 The jury also found Butler had been convicted of a prior "strike" offense under the Three Strikes Law and suffered three prior prison terms. The court sentenced Butler to a total prison term of 14 years 4 months. Butler filed a timely appeal.
I. FRAUDULENTLY PRESENTING MULTIPLE CLAIMS FOR THE SAME LOSS OR INJURY
The jury convicted Butler of violating Penal Code section 550, subdivision (a) which states: "It is unlawful to do any of the following, or to aid, abet, solicit or conspire with any person to do any of the following: [ ¶] . . . [ ¶] (2) Knowingly present multiple claims for the same loss or injury, including presentation of multiple claims to more than one insurer, with the intent to defraud."
In his brief on appeal, Butler concedes that the evidence is sufficient to prove that he presented multiple claims for the same injury (facial scarring) to several manufacturers of electric razors fraudulently claiming that each of their products was the sole and exclusive cause of his injury. Butler maintains, however, that since the statute specifically refers to the presentation of fraudulent claims for the same loss or injury to more than one insurer, and he presented his claims to multiple manufacturers, he could not, as a matter of law, have violated the statute. We reject Butler's argument because it contradicts the plain language of the statute and because the statute's legislative history shows that it was not intended to be limited to claims presented to insurance companies.
The plain language of the statute does not require the fraudulent claims to be presented to more than one insurer. It states only that a violation of the statute includes the fraudulent presentation of multiple claims to more than one insurer. Thus, on its face, the statute applies to fraudulent claims presented directly to the alleged tortfeasors as occurred in this case.
The statute's legislative history confirms that it was not intended to be limited to claims made to insurers.
In 1935 the Legislature established the Insurance Code and provided in section 556 of the code that: "It is unlawful to: [ ¶] (a) Present or cause to be presented any false or fraudulent claim for the payment of a loss under a contract of insurance." (Stats. 1935, ch. 145, § 556, subd. (a).) Insurance Code section 556 did not require that the fraudulent claim be presented to an insurer, only that the alleged loss be covered "under a contract of insurance."
Section 556, subdivision (a) remained unchanged until 1986 when it was amended to read: "It is unlawful to: [ ¶] (1) Knowingly present or cause to be presented any false or fraudulent claim for the payment of a loss, including payment for a loss under a contract of insurance. [ ¶] (2) Knowingly present multiple claims for the same loss or injury, including presentation of multiple claims to more than one insurer, with an intent to defraud." (Stats. 1986, ch. 1324, § 1, italics added.) The 1986 amendment was suggested by the Attorney General who explained: "Such amendments to subsections (a)(1) and (2) would proscribe presentation of false or fraudulent claims to insurance companies or to individuals. It would also proscribe presentation of multiple claims to individuals, to insurance companies, or to individuals and insurance companies, with the intent to defraud."*fn3 California courts have long construed the word "individual" to include a corporation. (Cruze v. National Psychiatric Services, Inc. (2003) 105 Cal.App.4th 48, 55.)
The amended statute made it a crime to present false claims of injury to one or more individuals regardless of whether those claims were covered by a "contract of insurance" and regardless of whether the individuals chose to submit the claims to their insurers. The effect of this amendment is illustrated by the facts regarding Butler's fraudulent claim to Phillips. It is Phillips' practice not to purchase insurance against small claims such as the one by Butler but to handle those claims itself. The fraud Butler perpetrated on Phillips would not have been punishable under the original version of Insurance Code section 556 which required that the claim be "for the payment of a loss under a contract of insurance." The fraud, however, would have been punishable under the 1986 amendment to the statute making it a crime to "present multiple claims for the same loss or injury" because the statute no longer required that the loss be covered by insurance. The amendment recognized that fraud is still fraud whether the individual is partly or wholly self-insured or whether the individual chooses not to submit the claim to its insurer.
In 1989, Insurance Code section 556 was repealed (Stats. 1989, ch. 1119, § 1) and subdivision (a)(1) and (2) of that section was reenacted verbatim as Insurance Code section 1871.1, subdivision (a)(1) and (2). In 1992, that section was repealed and reenacted verbatim as Penal Code section 550. (Stats. 1992, ch. 675, § 8.) The California Highway Patrol, which supported this move, explained that "[t]he consolidation of punitive statutes relating to insurance fraud into one code will assist insurance fraud investigators and the criminal justice system in enforcing the applicable statutes."*fn4
Butler contends the court in State of California ex rel. Nee v. Unumprovident Corp. (2006) 140 Cal.App.4th 442, 447, 450 (Nee) interpreted Penal Code section 550 as applying only to fraudulent claims made to insurance companies. He is mistaken.
In Nee the plaintiff brought a qui tam action on behalf of the state under Insurance Code section 1871.7, subdivision (e)(1) which provides that "[a]ny interested persons, including an insurer, may bring a civil action for violation of this section for the person and for the State of California." Section 1871.7 is violated by "[e]very person" who violates Penal Code section 550. ( § 1871.7, subd. (b).) Plaintiff alleged that the defendant insurance company violated section 1871.7 by making false and misleading statements in the marketing of disability insurance and in connection with claims for payments or other benefits pursuant to those policies. (Nee, supra, 140 Cal.App.4th at p. 445.) Among the issues in Nee was whether the defendant insurance company could be held liable under section 1871.7, subdivision (b) for violating Penal Code section 550's prohibition on making fraudulent claims. The court held that despite the reference to "every person" in section 1871.7, subdivision (b) the insurer could not be liable for violating Penal Code section 550 because "plaintiff's allegations of insurer misconduct do not include the presentation of false or fraudulent claims." (140 Cal.App.4th at p. 450.) In dictum the court stated that Penal Code section 550 "criminalize[s] the making of false or fraudulent claims to insurers" not the making of false or fraudulent claims by insurers. (140 Cal.App.4th at p. 447, italics added.) The court repeated this dictum later noting that "the class of persons who violate [Penal Code section 550] are those who submit false or fraudulent claims to insurers." (Id. at p. 450, fn. omitted.) The court was not asked, and did not decide, whether the only class of persons who can violate Penal Code section 550 are those who submit fraudulent claims to insurers. For the reasons we explained above, we conclude the class is not so limited.
II. INSTRUCTION ON PRESENTING CLAIMS TO INSURERS
Because Butler concedes that the evidence is sufficient to prove that he presented multiple fraudulent claims for the same injury to several manufacturers and because we hold such proof is sufficient to establish a violation of Penal Code section 550, the court's instruction that the crime required proof that "the defendant presented two or more claims for the same loss or injury to more than one insurer" was harmless error. (People v. Traster (2003) 111 Cal.App.4th 1377, 1389-1390 [instruction requiring People to prove unnecessary element of crime is harmless error].)
III. THEFT BY FALSE PRETENSES
The jury convicted Butler of one count of grand theft of personal property from Phillips Electronics in violation of Penal Code section 487, subdivision (a).*fn5 Theft is defined in section 484, subdivision (a) which states: "Every person who shall feloniously steal, take, carry, lead or drive away the personal property of another . . . or who shall knowingly and designedly, by any false for fraudulent representation or pretense, defraud any other person of money . . . is guilty of theft."
The court gave the jury the basic instruction on theft by larceny, CALCRIM 1800. "To prove that the defendant is guilty of [theft], the People must prove, number one, the defendant took possession of property owned by someone else; number two, the defendant took the property without the owner's consent; number three, when the defendant took the property, he intended to deprive the owner of it permanently; and, number four, the defendant moved that property, even a small distance, and kept it for any period of time however brief."
We agree with Butler's contention that the court erred in instructing the jury on theft by larceny under section 484 instead of theft by false pretenses under section 532. Theft by larceny is not applicable here because Butler did not take Phillips' property without its consent. Rather, the facts show that Phillips consented to pay money to Butler as a result of Butler's false representations of injury from using a Phillips razor. "If the owner of the property actually consents to the defendant's taking his property, there is no trespass in the taking and hence no larceny." (People v. Brock (2006) 143 Cal.App.4th 1266, 1275, fn. 4.) "It was that very consent that makes this a case of false pretenses," not larceny. (People v. Beaver (2010) 186 Cal.App.4th 107, 124.)*fn6
Theft by false pretenses requires proof of elements different from proof of theft by larceny. As stated in CALCRIM 1804, to prove theft by false pretenses the People must prove beyond a reasonable doubt that: "1. The defendant knowingly and intentionally deceived a property owner . . . by false or fraudulent representation or pretense; [ ¶] 2. The defendant did so intending to persuade the owner . . . to let the defendant . . . take possession and ownership of the property; [and] [ ¶] 3. The owner . . . let the defendant . . . take possession and ownership of the property because the owner . . . relied on the representation or pretense." The instruction goes on to state in accordance with section 532, subdivision (b) that the defendant cannot be found guilty of theft by false pretenses unless the People provide corroborating evidence proving that "[t]he false pretense was accompanied by either a false writing or false token" or "[t]here was a note or memorandum of the pretense signed or handwritten by the defendant" or "[t]estimony from two witnesses or testimony from a single witness with other evidence supports the conclusion that the defendant made the pretense." Thus, even though the record in this case contains evidence to support all the elements of theft by false pretenses, it was error not to instruct on those elements because the jury was never called upon to determine if those elements were established beyond a reasonable doubt as required by the Sixth and Fourteenth Amendments.
People v. Beaver, supra, 186 Cal.App.4th 107 is directly on point. The court held instructional error was prejudicial where the jury is instructed on theft by larceny but the evidence could support only a conviction of theft by false pretenses because the defendant did not "[take] the property without the owner's consent"; the victim gave the property to the defendant under the defendant's false pretense that he had been injured due to the fault of the victim. (Id. at pp. 122, 123, 125.) The Beaver court reasoned that to allow a conviction of theft by false pretenses when the jury was instructed only on theft by larceny would relieve the prosecution of its burden to prove the additional elements of reliance and corroboration: "[T]he instructions read to the jury did not include all the elements necessary for a charge of theft by false pretenses. Therefore, even if there was sufficient evidence in the record to support such a charge, the failure to instruct on those elements violated defendant's constitutional rights to have the charges decided by a jury." (Id. at p. 125.) The court stated it could not find the error harmless beyond a reasonable doubt (Chapman v. California (1967) 386 U.S. 18, 24) because there was substantial doubt about the credibility of the witnesses whose evidence the jury would have had to believe to find the elements of theft by false pretenses. (Beaver, supra, 186 Cal.App.4th at p. 125.)
Although we agree that the instruction given in this case was erroneous for the reasons explained in Beaver--the court did not instruct on the elements of theft by false pretenses--Butler is not entitled to a reversal of his theft conviction. Applying the Chapman standard, as the court did in Beaver (186 Cal.App.4th at p. 125), we are convinced beyond a reasonable doubt that the error did not contribute to the verdict obtained. The record demonstrates the required elements of reliance and corroboration for the crime of theft by false pretenses and the evidence against Butler was strong and extremely credible.*fn7
IV. CONSECUTIVE SENTENCES FOR FALSE CLAIMS AND THEFT
The trial court sentenced Butler to the upper term of five years, doubled under the Three Strikes Law, for making false claims in violation of section 550, subdivision (a)(2) and a consecutive term of eight months, doubled, for theft from Phillips Electronics.
Butler contends the court erred because the false claims and the theft were part of an indivisible, ongoing course of conduct with a single intent and objective under section 654. We agree. As to Phillips, Butler had the same intent and objective in count I and count II: to obtain money from Phillips by false pretenses. Therefore, the sentence on the theft conviction should have been stayed under section 654.
V. RESTITUTION FINE
The trial court imposed a restitution fine of $1,000 pursuant to section 1202.4. Butler speculates that the court arrived at this figure by multiplying the minimum fine, $200, times the number of his felony convictions (five). ( § 1202.4, subd. (b)(1), (2).) If the court did so the court erred because the sentences on the three perjury counts were stayed under section 654. (People v. Le (2006) 136 Cal.App.4th 925, 934.)
Butler forfeited this argument because he did not object to the restitution fine in the trial court. It is well established that any factual or legal objection to a restitution order is forfeited if not presented to the trial court. (People v. Brasure (2008) 42 Cal.4th 1037, 1075.)
We reject Butler's argument that his attorney's failure to object to the restitution fine constituted ineffective assistance of counsel. Contrary to Butler's claim, it is not at all evident from the record that the court arrived at the $1,000 figure by multiplying the minimum fine of $200 times the number of felony convictions (five). The court could have chosen the amount of $1,000 under its discretion to set the amount of the restitution fine anywhere between $200 and $10,000 "commensurate with the seriousness of the offense." ( § 1202.4, subd. (b)(1).) Defense counsel could have reasonably believed that the $1,000 amount the court chose was reasonable and there would be no chance of success in objecting. Failing to object to a trial court ruling is not ineffective assistance when the objection would have been futile. (People v. Wright (1990) 52 Cal.3d 367, 443.)
The convictions and the restitution fine are affirmed. The judgment is modified to stay the imposition of sentence on the theft conviction and the trial court is directed to prepare a corrected abstract of judgment and forward it to the Department of Corrections and Rehabilitation.
CERTIFIED FOR PARTIAL PUBLICATION.
We concur: MALLANO, P. J. JOHNSON, J.