Opinion
NOT TO BE PUBLISHED IN OFFICIAL REPORTS
Appeal from an order of the Superior Court of Orange County, Super. Ct. No. 99HF1125 Ronald P. Kreber, Judge.
Tony Rackauckas, District Attorney, Stephan L. Sauer, and William Overtoom, Deputy District Attorneys, for Plaintiff and Appellant.
Marta I. Stanton, under appointment by the Court of Appeal, for Defendant and Respondent.
Law Offices of David N. Thatcher & Associates and David N. Thatcher for Third Party Claimant and Respondent Reza Mahallaty.
No appearance for Third Party Claimant and Respondent John R. Cummings.
Jones & Mayer, Michael R. Capizzi and Harold W. Potter for Third Party and Respondent Q-Soft, Inc.
Edmund G. Brown, Jr., Attorney General, Paul D. Gifford, Senior Assistant Attorney General, Felix E. Leatherwood, Leslie Branman Smith and Tim Nader, Deputy Attorneys General, for Third Party and Respondent Franchise Tax Board.
OPINION
SILLS, P. J.
This is the third time this court has considered an appellate matter concerning the criminal conviction and sentencing of a woman for embezzling money (some $261,373) from her corporate employer. The crimes were committed in the late 1990’s and the woman was convicted a decade later. She was twice married, and the two houses in which she held a community property interest were seized and sold by a court-appointed receiver pursuant to the discretionary provisions of the Freeze and Seize Law, Penal Code section 186.11, subd. (e). Shortly after the woman’s conviction, the receiver paid the corporate employer $346,765 from the seized funds, more than the amount of money she had stolen.
All further statutory citations are to the Penal Code, except as noted.
But half of the seized funds still remained in court-controlled interest-bearing bank accounts. The corporate employer laid claim to these remaining funds under the 1982 election’s Proposition 8, the so-called Victim’s Bill of Rights. (Cal. Const., art. I, § 28, subd. (b).) Also, the woman’s two husbands sought to recover their shares of the community residences under the “innocent spouse” provision of the Freeze and Seize Law. (§ 186.11, subd. (g)(5).)
In Q-Soft, Inc. v. Superior Court (2007) 157 Cal.App.4th 441 (Q-Soft), we issued a published opinion to stress that criminal courts have a “wide modicum of discretion” in any distribution order under the Freeze and Seize Law to balance the “strong interest in fully reimbursing white collar crime victims for their losses” against the “legitimate property interests of innocent third persons, including innocent spouses.” (Id. at p. 451.)
On remand, the criminal court held a four-day hearing and issued a third distribution order allocating an additional $41,902 to the corporate employer, and the remainder to the innocent spouses, with the exception of $94,311, which was set aside for the benefit of the Franchise Tax Board (FTB).
The district attorney, the only appellant here, contends the criminal court had no discretion but to award the remaining funds to the corporate employer to provide payment of 10 percent compound interest to the corporate victim from the date of the thefts until the present time.
We find no abuse of discretion in the manner in which the criminal court awarded interest on the stolen funds, allowing for compound interest from the date of the thefts, but terminating the award of interest upon the woman’s conviction and shortly before the stolen funds were repaid. We further find that substantial evidence supports the court’s factual determinations that the innocent spouses properly could recover their legitimately acquired interests in the seized funds. The criminal court has provided the clarification we requested in our previous opinion, and the new distribution order is appropriately made.
We stress, as we did in Q-Soft, that we deal with a distribution order issued as part of a criminal proceeding. The criminal court never purported to resolve the civil liability of the convicted embezzler, or to determine which of her property or assets it could look to enforce such liability, including community assets. We leave this matter to another court for another day.
I
Factual and Procedural History
A. The Criminal Appeal and Prior Writ
Defendant began working for Q-Soft, a computer consulting firm, as a bookkeeper and eventually was promoted to become its chief financial officer. Between 1995 and 1998, she embezzled $261,373 from her employer through a variety of stratagems.
Defendant had two husbands during the period of time in which she was stealing money from her employer. She and her first husband, Reza Mahallaty (Mahallaty), owned a house in Trabuco Canyon, which they had acquired in 1989. The couple separated in 1993, well before she began her thefts, and divorced in 1997. Mahallaty had no knowledge of her criminal activities.
Defendant married her second husband, John R. Cummings, in August 1997. At the time of his marriage, Cummings already owned a residence in Dove Canyon which he had purchased in April of that year, using his own funds, as his separate property. Following the marriage, Cummings transferred the Dove Canyon property to defendant and himself as community property.
Defendant was arrested in 1999 on multiple counts of grand theft, forgery and aggravated white collar crimes. The criminal court thereupon issued an order under the “Freeze and Seize Law” (§ 186.11), freezing both the Trabuco Canyon and Dove Canyon residences.
In October 2002, a court-appointed receiver sold the Trabuco Canyon property for a net of $164,826. In May 2004, the receiver sold the Dove Canyon property for a net of $563,372. The funds were deposited into interest-bearing accounts with the court.
Following a jury trial, defendant was convicted in February 2004 and sentenced to four years in prison.
In March 2006, the court affirmed the judgment of conviction in an unpublished opinion authored by Justice Bedsworth, with Presiding Justice Sills and Justice Aronson on the panel. (People v. Mahdavi (Mar. 21, 2006, G033693 [nonpub. opn.])
In April 2004, the criminal court held a restitution hearing, and ruled that Mahallaty and Cummings were “innocent spouses” under section 186.11. On August 27, 2004, as a result of the court’s first distribution order, Q-Soft received an initial distribution of $346,765 from the proceeds held by the receiver. Despite its ruling that Mahallaty and Cummings were innocent spouses, the court granted Q-Soft’s request to stay distribution of their one-half interest in the funds from the sale of the two properties.
In July 2005 the court issued a second distribution order permitting Mahallaty to retain his one-half community interest in the Trabuco Canyon property, and permitting Cummings to retain most (but not all) of his one-half community interest in the Dove Canyon property.
Q-Soft filed a petition for writ of mandate from this second distribution order. We issued a stay and remanded the matter to the criminal court to determine which portion of the frozen assets may used to provide restitution to Q-Soft. We also held that Mahallaty and Cummings should be given an opportunity to prove that “that they are innocent spouses... [who] ‘legitimately’ acquired their community interests” and who “did not reap the ‘fruit of fraud.’” (Q-Soft, supra, 157 Cal.App.4th at p. 451.)
Q-Soft filed a petition for review, arguing that we misapplied California community property law in construing the innocent spouse provision of the Freeze and Seize Law. The Supreme Court denied review. (Q-Soft, supra, 157 Cal.App.4th, review den., Feb. 19, 2009, No. S159756.)
B. Postwrit Proceedings
On remand, Judge Kreber declined to permit depositions to be taken but did hold evidentiary hearings to determine the amount of restitution to which Q-Soft was entitled and whether Mahallaty and Cummings had met their burdens of proof to establish that their community interests in the proceeds from the sale of the family residences were legitimately acquired.
As of mid-May 2008, the receiver held some $350,421 in frozen funds, having previously made distributions to Q-Soft described above.
On October 15, 2008, after hearing testimony and arguments of counsel, the court filed a third distribution order regarding these funds. The court determined that the amount necessary to provide full restitution to Q-Soft was $627,639. The court reached this decision as follows: (1) $261,373 for the moneys stolen by defendant from Q-Soft, and (2) $238,591 as ten percent preorder interest (compounded annually) from the date of each theft to the date of conviction, and (3) $127,675 for other economic losses sustained by Q-Soft, including auditing expenses, attorney fees, missing computer equipment, and a stock repurchase. Doing the math, and crediting Q-Soft with $346,765 for the payment already made in August 2004 in the first distribution order, the court decided that Q-Soft was entitled to an additional $280,874 to achieve full restitution.
Where to get the shortfall? While there were sufficient funds in the frozen accounts to provide recompense to Q-Soft, the criminal court ruled that such a full distribution would run afoul of the “innocent spouse” provision in the Freeze and Seize Law based upon legitimately acquired community property interests of Mahallaty and Cummings.
The court determined that Mahallaty was an innocent spouse “as there is nothing to show that he had knowledge that [defendant] was stealing from Q-Soft.” The court declined to award Mahallaty any appreciation in value on the Trabuco Canyon property during the years (March 1995 through August 1998) in which defendant was stealing from Q Soft. By these calculations, the court awarded Q-Soft 53.1 percent of the equity and appreciation of the Trabuco Canyon property proceeds, with the remaining 46.9 percent awarded to Mahallaty.
The court construed Cummings to be an innocent spouse as well. “No evidence shows [Cummings] had knowledge if [defendant], his wife, that she was stealing from Q-Soft.” However, the court found defendant had commingled $25,000, from Q-Soft into Cummings’ account, “during the time she was stealing.” The court therefore declined to award Cummings any appreciation in value on the Dove Canyon property for the four-year period between 1997 through 2000. As a result, Q-Soft was entitled to 57.45 percent of the equity and appreciation of the Dove Canyon proceeds, with 42.55 percent for Cummings’ benefit. “The money given to [Cummings] by [defendant] enlarged the equity and this enlarged equity cannot go to [Cummings].”
By these calculations (and deducting one-half of the receiver’s fees and costs and crediting Q-Soft with the prior distributions), the court awarded Mahallaty the sum of $66,034, Cummings the sum of $123,981, Q-Soft the sum of $41,902 and held, for the benefit of FTB, the sum of $94,311.
The court held that interest on the receiver accounts should be paid pro rata to Q-Soft, Mahallaty and Cummings.
On December 11, 2008, the district attorney filed a notice of appeal from the third distribution order “distributing pursuant to Penal Code section 186.11(j) the remaining funds held by the receiver.” We granted Q-Soft and FTB’s requests to file respondent’s briefs. Mahallaty also filed a respondent’s brief, but Cummings did not. On the eve of oral argument, Cummings submitted a request for court-appointed counsel on the ground of indigency and based on the government’s attempts to use his assets to pay restitution owed by his wife as a result of her fraud. We denied the request.
II
The Criminal Court Properly Exercised Its Discretion to Award Interest As Part of the Restitution Award
Q-Soft, as a crime victim, is constitutionally entitled to payment of restitution, from defendant, the person convicted of crimes for the economic losses suffered as a result of defendant’s criminal conduct. (Cal. Const., art. I, § 28, subd. (b), also known as Proposition 8 or The Victims’ Bill of Rights; see People v. Giordano (2007) 42 Cal.4th 644, 652 (Giordano.) Implementing legislation under Proposition 8 mandates that crime victims receive “full restitution” (§ 1202.4, subd. (f)) “directly from” the defendant (§ 1202.4, subd. (a)(1)) for “economic losses” suffered “as a result of the defendant’s conduct.” (§ 1202.4, subd. (f).) Defendant’s obligation to pay restitution as part of her criminal sentence is a “general obligation and not one limited to the value of assets and property connected with crime.” (People v. Semaan, 42 Cal.4th 79, 86 (Semaan).)
Victim restitution for economic loss caused by a criminal defendant is mandatory, and a sentence without a restitution award is invalid. (People v. Hudson (2003) 113 Cal.App.4th 924, 929.) But that does not mean that sentencing judges lack discretion to determine the appropriate amount of full restitution as part of a criminal sentence. On appeal, we reverse the amount of a restitution order only for a clear abuse of discretion. “In determining the amount of restitution, all that is required is that the trial court ‘use a rational method that could reasonably be said to make the victim whole, and may not make an order which is arbitrary or capricious.’ [Citations.] The order must be affirmed if there is a factual and rational basis for the amount.” (People v. Akins (2005) 128 Cal.App.4th 1376, 1382 (Akins).) We presume the order is correct, and indulge in all presumptions to support it on matters in which the record is silent. (Giordano, supra, 42 Cal.4th at p. 666.)
A restitution order is not the same as a civil judgment for damages. In People v. Friscia (1993) 18 Cal.App.4th 834, the court declined to award two embezzlement victims additional restitution as part of the criminal sentencing for their own time expended in computing their losses. The court stated, “‘“Disposing of civil liability cannot be a function of restitution in a criminal case. To begin with, the criminal justice system is essentially incapable of determining that a defendant is in fact civilly liable, and if so, to what extent.... A party sued civilly has important due process rights, including appropriate pleadings, discovery, and a right to a trial by jury on the specific issues of liability and damages. The judge in the criminal trial should not be permitted to emasculate those rights by simply declaring his belief that the defendant owes a sum of money.” [Citations.]’” (Id. at pp. 839-840.)
The right to interest is purely statutory; at common law, judgments did not bear interest. “‘It has been said that interest on verdicts is purely statutory, and, being in derogation of the common law, cannot be extended beyond the statutory regulation.’ [Citation.].... [¶] At the present time, however, interest on judgments is generally allowed by virtue of constitutional or statutory provisions granting such right, even though the obligation on which a judgment is recovered was not interest-bearing in its character; but, as this right to interest is purely statutory and in derogation of the common law, it cannot be extended beyond the statutory regulations or limitations.’ [Citation.]” (Westbrook v. Fairchild (1992) 7 Cal.App.4th 889, 893 (Westbrook); see also People v. Hart (1998) 65 Cal.App.4th 902, 906 [Penal Code does not provide for accrual of interest on restitution fines, attorney fees or probation costs].)
The district attorney, joined by Q-Soft, objects to Judge Kreber’s determination that payment of $627,639 would constitute full restitution to Q-Soft pursuant to the provisions of Proposition 8 (Cal. Const., art. I, § 28, subd. (b)) and its implementing legislation (§ 1202.4.) The district attorney specifically objects to the manner in which Judge Kreber calculated interest in the restitution order, saying the judge’s order of $238,591 for ten percent interest from the date of each theft to the date of conviction is too low. While neither the district attorney nor Q-Soft suggests an alternative number in their briefs, they contend that Judge Kreber erred by failing to award interest at the ten percent statutory rate for any portion of the restitution order remaining unpaid.
In its legal briefs below, Q-Soft asked for 10 percent interest, compounded monthly. But California law for postjudgment interest at most provides for 10 percent simple interest, not compound interest. “There is no statutory authorization for a higher rate, and the general rule is that there is no compounding of interest in the absence of specific statutory authority. ‘Interest may not be computed on accrued interest unless by special statutory provision or by stipulation of the parties....’ [Citations.]... The general rule is that interest may not be computed on accrued interest unless by special statutory provision, or by stipulation of the parties, and in the latter event the amount may not be fixed in conflict with statutory provisions.’” (Westbrook, supra, 7 Cal.App.4th at p. 894.) “There is no ‘inherent equitable power’ to award postjudgment compound interest. To the contrary, exercise of such a power would contradict the authorities cited above, and would result in a postjudgment interest award which exceeds the constitutional and statutory provisions for the payment of 10 percent simple interest on a judgment until satisfied or renewed.” (Id. at p. 897.)
Judge Kreber’s rulings on statutory interest were influenced by the timing of the receiver’s actions in seizing the Trabuco Canyon and Dove Canyon properties for a forced sale, as well as the timing of the receiver’s subsequent payment to Q-Soft. On August 27, 2004, the receiver paid Q-Soft $346,765 as restitution. Q-Soft thereby recovered 100 percent of the funds that had been stolen ($261,373), as well an additional $85,392 -an amount that exceeded all of its remaining economic losses, as determined by Judge Kreber.
Judge Kreber attributed this situation to the receiver’s acuity and management skills: The properties initially were in a “financial mess, ” when “[t]here was not enough money to pay the mortgage. The receiver was in a position to sell pennies on a dollar or to string it out which the receiver did and by holding on to [the] Dove Canyon property it enabled Q-Soft to collect much more restitution money.”
The district attorney erroneously contends that Q-Soft has yet to be repaid for the sums stolen by defendant during the period of her employment. According to the district attorney, “[m]ore than five years after the trial court terminated the accrual of interest, Q-Soft has yet to be repaid all the sums stolen by [defendant]. This leaves Q Soft without funds that it might otherwise need for the operation of its business, or to pay outstanding debts, wages, or taxes, or to expand [its] business or otherwise invest for its benefit.”
These characterizations are belied by the record. Q-Soft is in the (relatively) fortuitous position of being made whole (except for preorder interest) within months of defendant’s criminal conviction. Far from being allowed to retain her interest in stolen property, defendant’s two residences were seized by the receiver shortly after defendant was arrested in 1999. Contrary to the district attorney’s claim, neither defendant nor the innocent spouses has profited from her illegal activity since the trustee’s forced sales of the Trabuco Canyon and Dove Canyon properties more than a decade ago.
Although the court determined that the delay in payment actually served to benefit Q-Soft by building up the available funds to which Q-Soft could look for restitution, the court nonetheless awarded Q-Soft some $238,591 in interest, from the date of each theft to the date of sentencing. The court awarded interest from the date of each theft, rather than from the date of Q-Soft’s discovery of the thefts, as it initially was inclined to do. “It’s a little hard to figure all those different dates, and I normally wouldn’t do it that way, but I think Q-Soft deserves to receive that money from that day.” The court further exercised its discretion to allow this interest to compound annually, even though the court simply could have awarded Q-Soft 10 percent simple interest. (Westbrook, supra, 7 Cal.App.4th at p. 893.) After Q-Soft had received restitution for the moneys that had been stolen, the court refused to allow the remaining unpaid portions of the award (entirely for preaward interest) to compound further.
Neither the district attorney nor Q-Soft has shown a clear abuse of discretion in the interest component of the restitution order. Judge Kreber used a rational method that endeavored to make Q-Soft whole for the amount of the thefts and other concrete economic losses, while acknowledging California’s prohibition against the compounding of interest, except in narrowly defined circumstances. (Westbrook, supra, 7 Cal.App.4th at p. 893.) The amount of the restitution order well exceeds the amount of the theft and Q-Soft’s other economic losses. The award is neither arbitrary nor capricious. (Akins, supra, 128 Cal.App.4th at p. 1382.)
Since Q-Soft fully recovered its stolen funds in 2004, leaving unpaid only the preorder interest component of the restitution award, Q-Soft essentially seeks to recover interest upon interest. Absent express direction by statute or contract, California disapproves of such an award. (See, e.g., Estate of Sharp (1971) 18 Cal.App.3d 565, 586 [“We reject any procedure by which unpaid accrued interest would itself bear interest”].) “[T]he compounding of interest has never been looked upon with favor in this state.” (Robertson v. Dodson (1942) 54 Cal.App.2d 661, 665.)
In Hess v. Ford Motor Co. (2002) 27 Cal.4th 516, 530-533, the California Supreme Court held that a car accident victim was not entitled to obtain interest on a prejudgment interest award imposed because he recovered damages greater than the amount of his statutory demand under Code of Civil Procedure section 998. According to the court, “Prejudgment interest accrued under Civil Code section 3291 is not part of the judgment, and a plaintiff may not obtain interest on this prejudgment interest.” (Id. at p. 533.) The court found the prejudgment interest award, even when not compounded, adequately reimbursed the accident victim for the added cost and delay he suffered until the principal judgment was paid. (Ibid.)
And, in Vigilant Ins. Co. v. Chiu (2009) 175 Cal.App.4th 438 (Vigilant), the criminal defendant stole nearly $400,000 of computer equipment from his employer during the period of his employ. He was convicted of grand theft and ordered to pay restitution of $615,000, including the value of the stolen property, as well as lost profits and opportunity costs, and preorder interest. (Vigilant, supra, at p. 441.) The restitution order, however, apparently did not include postorder interest.
The employer’s insurer subsequently secured a judgment against the criminal defendant for civil damages for fraud, conversion and embezzlement. The Vigilant court rejected the defendant’s argument that such a civil judgment amounted to a second duplicative judgment for the same injury. The court stated, “While a restitution order is enforceable ‘as if [it] were a civil judgment’ (§ 1202.4, subd. (i)), it is not a civil judgment. A restitution order does not resolve civil liability. [Citation.] There is no requirement that a restitution order ‘reflect the amount of damages that might be recoverable in a civil action.’ [Citation.]” (Id. at pp. 444-445.)
The Vigilant court observed that the defendant was entitled to a credit for any payments made on either restitution order or the civil judgment. However, while the defendant be credited for any payments made pursuant to the restitution order for preorder interest, “the amount set by the restitution order does not [thereafter] accrue interest.” (Id. at p. 446, fn. 10.) “As the amount set by the restitution order does not accrue interest, amounts paid on the judgment attributable to postjudgment interest would not be credited against the amount due under the restitution order. Similarly, the prejudgment interest awarded for the period after the restitution order... could not have been included in the restitution award, and amounts paid toward those obligations therefore cannot be credited against the restitution order.” (Ibid., italics added.)
In an analogous situation, the Court of Appeal recently was called upon to decide whether a prevailing appellant was entitled to recover interest on moneys borrowed to fund a letter of credit to secure a bond on appeal. The court declined to do so, noting “there is something like a presumption of proportionality. As evidenced by the figures shown by this case, interest charges can be substantial.... [S]uch charges could dwarf any other item of costs.” (Rossa v. D. L. Falk Constr., Inc. (2010) 184 Cal.App.4th 438, 448-449.)
III
The Court Properly Exercised Its Discretion to Protect Legitimately Acquired Assets of the Criminal’s Innocent Spouses From Being Seized in a Criminal Proceeding
The restitution order, which we discussed in the previous section, is against defendant only, not any other person, and certainly not against Mahallaty or Cummings. Section 1202.4, upon which the district attorney and Q-Soft rely, provides that crime victims “shall receive restitution directlyfrom any defendant convicted of that crime.” (§ 1202.4, subd. (a)(1), italics added.) Neither Mahallaty nor Cummings has been convicted of any crime, and they were not responsible for Q Soft’s loss. They are not themselves personally liable to compensate Q-Soft merely because they have the misfortune of having been married to a convicted embezzler. “The restitution condition is imposed not to satisfy a purported private debt to an individual, but to reform and rehabilitate the person whose action... constituted a public offense ‘prosecuted in the name of the people of the state of California....’” (People v. Carbajal (1995) 10 Cal.4th 1114, 1126, fn. 13.)
Although the restitution order is only against defendant, the district attorney and Q-Soft seek to secure its payment from funds determined to belong to Mahallaty and Cummings under the innocent spouse provision of the Freeze and Seize Law. (§ 186.11, subd. (g)(5).)
This situation has arisen because there is a shortfall ($153,199) between the amount of the restitution order ($627,639) and the amount of funds still held by the receiver ($388,667) after the initial distribution to Q-Soft ($346,765). Should Q-Soft be able to look to the innocent spouses’ shares of these frozen funds to satisfy the shortfall?
As we stated in Q-Soft, supra, this provision in subdivision (i)(3) is intended to preserve an innocent spouse’s “legitimate” interest in community property while at the same time preventing them from reaping the “‘“fruit of fraud”’” at the expense of the victim’s right to restitution. (Q-Soft, supra, 157 Cal.App.4th at p. 450.) We rejected the contention that innocent spouses automatically forfeited any and all of their interests in property or assets held as community property.
Criminal restitution is mandatory, but the Freeze and Seize Law is not. To the contrary, the Freeze and Seize Law uses the directory term “may” rather than the mandatory term “shall.” Section 186.11, subd. (e)(1) provides, in pertinent part: “Upon conviction of two or more felonies, as specified in subdivision (a), [property that is in control of the white collar criminal defendant] may be levied upon by the superior court to pay restitution and fines imposed pursuant to this section if the existence of facts that would make the person subject to the aggravated white collar crime enhancement have been admitted or found to be true by the trier of fact.” (Italics added.)
The criminal court is required to make a finding as to what portion of any frozen funds shall be distributed to the crime victim as restitution, but the nature of such a finding is left to the court’s discretion. Section 186.11, subdivision (i)(1)(A) provides, that “[i]f the defendant is convicted” of the aggravated white collar enhancement, “the trial judge... shall make a finding at that time as to what portion, if any, of the property or assets subject to the preliminary injunction or temporary restraining order shall be levied upon to pay fines and restitution to victims of the crime.” (Italics added.)
That the Freeze and Seize Law is not coterminous with a victim’s restitution rights is apparent from the statute’s listing of factors that may be considered by the criminal court in fashioning its orders concerning the frozen property. These include the defendant’s need to pay his or her reasonable legal fees (§ 186.11, subd. (g)(3)(E)(4)), necessary and appropriate living expenses (Ibid.), and “potential harm to the defendants and the interested parties....” (§ 186.11, subd. (g)(3).)
Most importantly, in making its final distribution order under the Freeze and Seize Law, the criminal court is directed to protect “the legitimately acquired interests of any innocent third persons, including an innocent spouse, who were not involved in the commission of any criminal activity.” (§ 186.11, subd. (i)(3), italics added.)
We remain in the realm of a criminal sentencing order imposed as a result of a criminal trial, not civil actions with their attendant pleadings, discovery and jury trials. The Freeze and Seize Law recognizes that its remedies “are cumulative to each other and to the remedies or penalties available under all other laws of this state....” (§ 186.11, subd. (l).) “The line between criminal restitution and common law damages is important to maintain.... Blur[ring] the line would... complicate criminal sentencing unduly and unnecessarily....” (U.S. v. Scott (7th Cir. 2005) 405 F.3d 615, 619.)
We review the criminal court’s findings in conjunction with this final distribution order under the substantial evidence test, applying a deferential review. (Semaan, supra, 42 Cal.4th at p. 87.) In Q-Soft, supra, 157 Cal.App.4th at p. 451, we specifically advised the court that it had a “wide modicum of discretion” to fashion an appropriate distribution order on remand “to account for varying individual circumstances.” We directed the court to “balance the strong interest in fully reimbursing” Q-Soft for its losses while, at the same time “protecting legitimate property interests” of Mahallaty and Cummings. (Ibid.)
The criminal court did not abuse its discretion in the third distribution order. Applying the substantial evidence test, we affirm its determination that Mahallaty and Cummings were “innocent spouses” who were not involved in defendant’s thefts, and had no knowledge of them. Further, given the evidence of a commingling of funds during the period of defendant’s thefts, we find the court acted well within the bounds of its discretion in ruling that neither husband was entitled to any equity appreciation during these periods because “[defendant] commingled funds during the time she stole money.... This money built up the equity in [the property] and Q-Soft should be able to collect restitution from this equity.” Finally, the court properly took into account the fact that nearly all of the shortfall was due to the compounding of interest even after the affected funds already had been seized from the innocent spouses.
Again, we stress that our order sustaining the judgment does not affect Q Soft’s ability to execute on any judgment it has obtained, or may obtain against defendant, including its rights under the Family Code to proceed against any community assets in which defendant has a community interest. Notwithstanding Q-Soft’s protestations, the criminal court has made no findings regarding what is, and what is not, Mahallaty or Cummings’ separate property.
Q-Soft questions why it must go through this “circuitous route.” Orderly judicial process demands no less. Defendant’s sentencing proceeding apparently has outlasted her four-year prison term. This protracted criminal case deserves to be put to an end. Q-Soft’s remedies, if any, are to be found in the civil courts.
IV
Neither Q-Soft Nor FTB Can Raise New Issues In Its Respondent’s Brief
Q-Soft raises new issues in its respondent’s brief that were not addressed in the appellant’s opening brief. Such matters are not properly before us. It is up to the district attorney, as the only appellant, to frame the issues that may be addressed by respondents on appeal.
The attorney general has taken the position that crime victims do not have standing to bring an appeal when the victim is dissatisfied with a restitution order under section 186.11. As the attorney general stated in a letter, dated December 4, 2007, “For purposes of standing to appeal, there is a significant difference between being a third-party claimant whose property interest is eliminated by a restitution order and a victim who has no direct claim to the third-party’s property, whose interest in recovery and the amount thereof must be balanced against all other victims and ‘innocent parties, ’ and whose interest is represented by the district attorney who can bring an appeal if appropriate.... [T]he restitution statutes ‘seem to contemplate that the People will look after the victims’ interests.’....”
In the summer of 2004, Q-Soft obtained a civil default judgment against defendant for $872,272, including $572,272 in compensatory damages and $300,000 in punitive damages. Defendant was in prison at the time, and neither Mahallaty nor Cummings, who are now claimed to be judgment debtors of this default judgment, were served with the complaint or appear to have had notice of it. In our published opinion, we expressed no view “whether Mahallaty and Cummings can be held personally liable for a debt on a default judgment against the incarcerated Wife, where neither man apparently was served with a summons and complaint in the civil action.... Because the matter has not been briefed, we do not decide whether there are any due process violations in enforcing a default judgment against unserved and unnamed spouses who were actively litigating similar issues in another forum.” (Q-Soft, supra, 157 Cal.App.4th at pp. 452-453; see also Fasuyi v. Permatex, Inc. (2008) 167 Cal.App.4th 681, 701 [“‘“The quiet speed of plaintiffs’ attorney in seeking a default judgment without the knowledge of defendants’ counsel is not to be commended”’”].)
In its respondent’s brief, Q-Soft again raises the specter of its default judgment. Q-Soft argues that the money proceeds from the sale of the Trabuco Canyon and Dove Canyon properties “is no longer held by the Receiver in custodia legis and is subject to the Levy on the Writ of Execution obtained in the civil action against Defendant....”
The matter was not properly before us in the earlier writ proceeding. It is not properly before us now. Q-Soft has been granted leave to file a respondent’s brief in this appeal. Although Q-Soft is nominally a respondent; its position in opposition to the restitution order coincides with the district attorney, the appellant. This confluence of interests prevents the only truly adversarial respondents– Mahallaty and Cummings– from having an opportunity to counter Q-Soft’s new arguments. Respondents “cannot seek... affirmative relief” and may not raise a claim of error other than to secure affirmance of a trial court ruling. (Estate of Powell (2000) 83 Cal.App.4th 1434, 1439.) “Here, without appealing, respondent seeks not to save the judgment but to overthrow it. This cannot be done....” (California State Employees’ Assn. v. State Personnel Bd. (1986) 178 Cal.App.3d 372, 382, fn. 7; see also Campbell v. Superior Court (2005) 132 Cal.App.4th 904, 922 [real parties in interest in writ proceedings cannot raise new issues for review in their responses to writ petitions].)
In like fashion, FTB has filed a respondent’s brief to express its concern that the third distribution order may affect its lawful administrative determination of defendant’s tax liability. The trial court ordered the receiver to pay $94,311 from Cummings’ share of the proceeds from the Dove Canyon property to FTB, but directed that such order be stayed, pending further order of the court, until Cummings and FTB had an opportunity “to work out these issues administratively.” FTB contends the court had no authority to impose such a stay.
Like Q-Soft, FTB is a respondent in this proceeding, and has not sought affirmative relief on its own. The district attorney did not incorporate FTB’s contentions in its opening brief. We do not consider such new issues here.
V
Disposition
The order is affirmed.
WE CONCUR: RYLAARSDAM, J. IKOLA, J.