People v. Lee CA1/2, A159651

Background

Miglena Nikolova Lee was convicted by jury of two counts of insurance fraud and in October 2019 was placed on three years' probation with restitution and fee obligations.
Homesite Insurance paid $18,000 to settle the fraudulent theft claim; Homesite later sought recovery of that $18,000 plus $64,280.03 in investigative and attorney fees incurred defending a subsequent bad-faith suit.
At the December 2019 restitution hearing the court ordered joint-and-several restitution to Homesite of $82,280.03, plus 10% interest from sentencing and a collection fee up to 15%; the court also ordered payment of probation services costs as determined by probation.
While appeals were pending, Assembly Bill 1950 (2021) reduced most felony probation terms; the trial court later terminated Lee’s probation, rendering her request to reduce the probation term moot.
During the appeal the Legislature enacted AB 1869 and AB 177 (amending Penal Code §1465.9) eliminating many court-imposed administrative fees; the Court of Appeal vacated unpaid balances of the probation services fee and the unpaid portion of the 15% collection fee but affirmed the restitution award and interest under Penal Code §1202.4.

Issues

Issue	Plaintiff's Argument (People)	Defendant's Argument (Lee)	Held
Whether Lee’s probation term should be reduced under AB 1950	Probation reduction issue could be remanded/considered under AB 1950	Lee sought retroactive reduction of her 3-year term to 2 years	Moot — probation was terminated after application of AB 1950, so relief unavailable
Whether attorney’s fees claimed by Homesite are recoverable as victim restitution under §1202.4	Fees are actual, reasonable attorney/investigative costs incurred because of Lee’s fraud and are recoverable under §1202.4(f)(3)(H)	Fees barred by prior civil settlement and some fees unrelated to the fraudulent theft (e.g., mold claim); attendance at criminal trial was unnecessary	Affirmed — trial court did not abuse discretion; settlement does not bar criminal restitution; fees were sufficiently tied to the criminal conduct and to aiding prosecution
Whether the probation services fee remains enforceable after AB 1869 (§1465.9)	Collection/authority basis disputed but AB 1869 applies to make unpaid balances unenforceable	Lee sought vacatur of unpaid probation services fee under AB 1869	Vacated — unpaid balance of probation services fee unenforceable and must be vacated as of July 1, 2021
Whether the 15% administrative collection fee and interest must be vacated under AB 177 (§1465.9(b))	Agreed administrative fee should be vacated; People conceded interest but Court rejected that concession	Lee sought vacatur of both the administrative collection fee and the interest on restitution	Administrative collection fee vacated for unpaid balance as of Jan 1, 2022; interest upheld because it was awarded as part of direct victim restitution under §1202.4 and was not eliminated by AB 177

Key Cases Cited

People v. Carbajal, 10 Cal.4th 1114 (1995) (probation termination can render appeal moot)
People v. Giordano, 42 Cal.4th 644 (2007) (standard of review for restitution orders is abuse of discretion)
People v. Dalvito, 56 Cal.App.4th 557 (1997) (restitution not overturned where factual basis supports amount)
People v. Grundfor, 39 Cal.App.5th 22 (2019) (civil settlement does not preclude criminal restitution)
People v. Guardado, 40 Cal.App.4th 757 (1995) (restitution order enforceable as a civil judgment)
People v. Anderson, 50 Cal.4th 19 (2010) (distinction between mandatory restitution under §1202.4 and discretionary probation restitution under §1203.1)
People v. Martinez, 2 Cal.5th 1093 (2017) (overview of restitution types and statutory scheme)
People v. Clark, 67 Cal.App.5th 248 (2021) (interpretation that §1465.9 renders certain unpaid administrative fees unenforceable)
People v. Lopez-Vinck, 68 Cal.App.5th 945 (2021) (fees collected before statutory cutoff date remain collectible)