The defendant, Charles Paxton, was convicted and sentenced for a theft he committed in his capacity as a stockbroker. In this appeal, he challenges a district court ruling that increased the amount of restitution he was required to pay to the victim of his crime. The appeal was transferred to the court of appeals where the district court’s judgment was affirmed. We granted Paxton’s application for further review.
After reviewing the record and considering the arguments presented, we are persuaded the district court erred in failing to factor into its calculation of the victim’s damages the sum paid to the victim by the defendant’s former employer. We vacate the contrary decision of the court of appeals, reverse the judgment of the district court, and remand the case for entry of a restitution order consistent with our decision.
I. Background Facts and Proceedings.
The record supports the following rendition of facts. In May 1995, Charles Pax-ton was a stockbroker for Everen Securities, Inc. At that time, Robert and Marilyn Clauss loaned Paxton $300,000 for the purchase of convertible notes in Diacrin, Inc. Pursuant to the parties’ written agreement, Robert Clauss was to receive fifteen percent of the profits from any stock ultimately obtained from the convertible notes.
Notwithstanding his agreement with the Clausses, Paxton used only $270,000 to purchase the notes and spent the remainder of the loan proceeds on personal expenses. Later, he converted the notes into 108,000 shares of Diacrin stock. On June 2, 1997, Paxton sold the shares for $1,147,500. The sale resulted in profits of $877,500 (the sale proceeds minus the purchase cost of $270,000). Paxton should have paid Clauss fifteen percent of these profits — $131,625—plus the loan amount of $300,000. Instead, Paxton paid Clauss only $134,000 and converted the balance of the sale proceeds to his personal use.
The State charged Paxton with first-degree theft as a result of these events. Paxton pled guilty to third-degree theft in violation of Iowa Code sections 714.1(1) and 714.2(3) (1999). The district court gave Paxton a suspended, indeterminate two-year prison term and placed him on probation. The court further fixed Pax-ton’s required victim restitution at $165,000 (the loan amount minus the sum Paxton had already repaid Clauss).
Paxton subsequently applied for a modification of the restitution order. He sought a credit for $28,927 Clauss received from Paxton’s bankruptcy estate. Paxton also requested credit for an arbitration award in the amount of $40,000 paid by Everen Securities to Clauss. The State sought to increase the restitution amount by the share of profits that Clauss was entitled to receive from the sale of the stock.
After a hearing, the district court determined Clauss was entitled to restitution for his agreed share of the profits on the stock sale ($131,625). The court also decided that the restitution award should be reduced by the amount Clauss received from the defendant’s bankruptcy estate. The court refused, however, to deduct the arbitration payment from the amount of *108 restitution owed by Paxton. These calculations increased the defendant’s required restitution to $267,798.
Paxton appealed, asserting the record did not contain substantial evidence in support of the award. More specifically, Pax-ton claimed the evidence was insufficient to show the terms of his agreement with Clauss, as well as the exact extent of the profits realized in the transaction. The defendant also contended his obligation to Clauss was extinguished in the bankruptcy proceeding and, consequently, no amount of restitution was appropriate. In addition, Paxton asserted error in the district court’s refusal to reduce the restitution order by the amount of the arbitration payment from Paxton’s former employer. The defendant’s final complaint rested on his assertion that his agreement with the Clausses was an illegal contract, and consequently Clauss would not have been able to recover any damages in a civil action.
The court of appeals affirmed the district court’s restitution order. The appellate court concluded the parties’ written agreement provided an adequate basis for the trial court’s calculation of Clauss’s damages, which properly included the profits expected by Clauss as established by the agreement. The court of appeals rejected Paxton’s claim the restitution amount should be limited to the amount paid by the bankruptcy estate. The court further concluded Paxton should not receive a credit for the arbitration award Clauss received from Paxton’s former employer. Finally, the court determined that Paxton failed to preserve his claim that his agreement with the Clausses was illegal because Paxton failed to raise the issue in district court.
We granted Paxton’s application for further review. Because we agree with the court of appeals’ resolution of these issues with one exception, we limit our discussion to that issue: credit for the arbitration payment.
II. Scope of Review.
We review the trial court’s restitution order for correction of errors of law.
See State v. Bonstetter,
III. Determination of Amount of Victim Restitution.
Iowa criminal defendants who plead guilty or who are found guilty must make “restitution ... to the victims of the offender’s criminal activities.” See Iowa Code § 910.2. Restitution includes the “payment of pecuniary damages to a victim.” Id. § 910.1(4). Pecuniary damages are defined as “all damages to the extent not paid by an insurer, which a victim could recover against an offender in a civil action arising out of the same facts or event, except punitive damages and damages for pain, suffering, mental anguish, and loss of consortium.” Id. § 910.1(3) (emphasis added).
The words used by the legislature to define “pecuniary damages” clearly indicate a legislative intent that restitution to a victim depend on what the victim could obtain in a civil action against the defendant.
See generally State v. Pickett,
The question here is whether any judgment obtained by Clauss against Pax-ton would be subject to a dollar-for-dollar credit for payments made by Paxton’s employer. This type of credit, known as the pro tanto credit rule, “is designed to prevent a double recovery by the injured party.”
Jamieson v. Harrison,
We have held “that the pro tanto rule remains viable in cases not affected by the enactment of chapter 668,” Iowa’s comparative fault statute.
Tratchel v. Essex Group, Inc.,
Even if Clauss could recover under a negligence theory subject to chapter 668, we do not think the proportionate credit rule of that statute would apply. Because Everen Securities was vicariously liable for Paxton’s conduct (rather than independently liable to Clauss), Everen Securities and Paxton would be treated as a single party under the comparative fault statute.
See
Iowa Code § 668.3(2)(&) (instructing court to treat defendants, where appropriate, “as a single party” for purposes of allocating fault);
Biddle v. Sartori Mem’l Hosp.,
Because the pro tanto rule would apply in any civil suit brought by Clauss against Paxton, Clauss’s recovery would be reduced by the $40,000 already paid by Pax-ton’s employer as partial satisfaction of Everen Securities and Paxton’s joint liability to Clauss. Since the victim’s pecuniary *110 damages under section 910.1(3) are measured by the amount of the victim’s potential civil recovery and because any civil judgment obtained by Clauss would be subject to a credit for the amount already paid by Paxton’s employer, we conclude Paxton’s obligation for victim restitution under chapter 910 would also be subject to the same credit.
The State has argued that recognition of such a credit is inappropriate because it would frustrate the intent of restitution, which is “to instill responsibility in offenders.”
State v. Izzolena,
We find these arguments unpersuasive in view of the clear language of the statutory definition of “pecuniary damages,” a definition that expressly ties victim restitution to the amount recoverable in a civil suit. The legislature presumably considered the policy implications of the definition it adopted and reached the legitimate conclusion that the victim of criminal conduct should be entitled to recover no more through the criminal process than the victim could have obtained in a civil action.
Cf. Teggatz,
We also observe that our interpretation of the statute does not thwart the rehabilitative goals of restitution. Reduction of Paxton’s restitution obligation to Clauss does not eliminate Paxton’s potential liability to his former employer for reimbursement of his employer’s payment to Clauss.
See Biddle,
We also find no inconsistency in our interpretation of the statute today and our decision in
Bonstetter
where we disallowed any offset against restitution for monetary claims held by the defendant against the victim. In
Bonstetter,
the defendant, convicted of converting monies from his employer, sought an offset against the restitution he was ordered to make to his former employer for amounts he claimed his employer owed him for accrued vacation and retirement benefits.
In contrast, here, our focus is on that part of the definition following the language interpreted in Bonstetter, namely, “which a victim could recover against the offender in a civil action arising out of the same facts or event.” Iowa Code § 910.1(3). As we have already discussed, any damages recoverable in a civil action would be subject to reduction to the extent of payments made to the victim for the same damages. Thus, the prohibition against double recovery, and the consequent credit for payments already received by the victim, is inherent in the statutory measure of recovery. The same cannot be said for the offset sought in Bonstetter, which was based on claims unrelated to the calculation of the victim’s damages.
TV. Application to Present Case.
Although the State argued on appeal that payments such as that made by Pax-ton’s employer should never reduce an offender’s restitution obligation, the district court’s refusal to credit Paxton with the arbitration payment was factually based. In its ruling, the district court acknowledged that this payment may have been based “on some sort of vicarious responsibility” of Everen Securities for the defendant’s conduct, but observed “there may be other reasons not disclosed to the court for this payment unassociated with the defendant.” The problem with the court’s ruling is that Clauss’s testimony at the restitution hearing, along with the defendant’s deposition testimony, shows the award was based on the defendant’s conduct, and no contrary evidence was presented in the record. Thus, the trial court’s decision to deny the defendant a credit for his employer’s payment rested on speculation and not on factual findings that were supported by substantial evidence.
V. Summary and Disposition.
We conclude the uncontroverted evidence in the record established that the arbitration payment made by Everen Securities was based on its vicarious liability for Paxton’s theft from Clauss. Because that payment would serve as a credit against any civil recovery by Clauss against Paxton, the same reduction is warranted in calculating Clauss’s pecuniary damages under chapter 910. The district court erred in failing to make this deduction in its restitution order.
Accordingly, we vacate the court of appeals’ decision and reverse the district court’s restitution order. The case is remanded to the district court for entry of an order requiring Paxton to pay victim restitution in the amount of $227,798, a reduction of $40,000 from the district court’s final order of restitution.
DECISION OF COURT OF APPEALS VACATED; DISTRICT COURT JUDGMENT REVERSED AND CASE REMANDED WITH INSTRUCTIONS.
Notes
. There is no indication in the record that the payment by Everen Securities was in exchange for a release of liability so as to raise the possibility that Paxton's liability was totally extinguished by the arbitration award.
Cf. Biddle,