State v. WWJ Corp.

Alexander, J.

(dissenting) — I agree with the majority’s conclusion that the Court of Appeals applied an incorrect standard in rejecting review of the constitutional claims raised by Johnson in his appeal. As the majority recognizes, the basis of the defendants’ claim is that the trial court committed a manifest error affecting a constitutional right. The claim may, therefore, be reviewed, provided we conclude that the asserted error is indeed “manifest” and of constitutional magnitude. I disagree, though, with the majority’s determination that we should deny review to Johnson on the basis that his claim of constitutional error is not “manifest” in that it is so lacking in merit that there is no chance of succeeding. For reasons set forth hereafter, I am of the view that the imposition of a $500,000 fine upon Johnson, in addition to the requirement that he pay restitution, attorney fees, and costs, is so extreme as to violate the Excessive Fines Clause of the Eighth Amendment and Due Process Clause to the Fourteenth Amendment of the United States Constitution.

As the majority observes, the Eighth Amendment to the United States Constitution provides that excessive fines shall not be imposed. Essentially, this provision serves to prohibit the government from imposing excessive fines as punishment. Even a civil sanction is punitive if “it can only be explained as serving in part to punish.” Austin v. United States, 509 U.S. 602, 610, 113 S. Ct. 2801, 125 L. Ed. 2d 488 (1993). It is readily apparent to me that the sanctions authorized by RCW 19.86.140 are punishment within the meaning of the Excessive Fines Clause. The *609$2,000 per violation sanction is described in the statute as a “civil penalty,” it is payable to the State, and it is imposed in addition to restitution, attorney fees, and costs authorized by RCW 19.86.080. Significantly, the trial court indicated in its summary judgment order that the “penalty is intended to punish and is not compensation for any actual pecuniary loss.” Clerk’s Papers (CP) at 59. In short, the civil penalty imposed here is indistinguishable from a fine imposed in a criminal case.

The more pertinent question is whether the punishment (fine) is excessive. A punitive fine is excessive under the Excessive Fines Clause if it is grossly disproportionate to the gravity of the defendant’s offense. United States v. Bajakajian, 524 U.S. 321, 118 S. Ct. 2028, 141 L. Ed. 2d 314 (1998). Although, as the United States Supreme Court noted in Bajakajian, any judicial determination regarding the gravity of an offense will be inherently imprecise, a good place to start the analysis, in my judgment, is to gauge the fine in relation to the harm caused by the offense. Using that standard, I fail to see how the $500,000 fine imposed on Johnson can be viewed as anything other than disproportionate to the offenses committed by him.10 Significant in that regard is the trial court’s finding that the persons harmed by Johnson would be made whole by payment of $32,254 in restitution. A $500,000 fine on top of $30,225.08 in attorney fees and costs is far out of proportion to the demonstrable harm caused to the persons who were the victims of Johnson’s offenses.

Without doubt Bajakajian is the leading case on the Eighth Amendment issue. Indeed, the Court noted there that heretofore it “has had little occasion to interpret, and has never actually applied, the Excessive Fines Clause.” Bajakajian, 524 U.S. at 327. Nevertheless, it applied the provisions in that case in which the defendant’s offense was attempting to leave the United States without report*610ing that he was transporting more than $10,000, to wit: $357,144. Pursuant to the provisions of a federal statute, the United States government sought forfeiture of the entire sum that was seized in transit. The Supreme Court concluded that such a penalty would be grossly disproportionate and would constitute an excessive fine. In reaching its decision, the Court emphasized the fact that although the failure of the defendant to report the transportation of a large sum of money affected only the government, the effect was “minimal.” Bajakajian, 524 U.S. at 339. Here, the same can be said. The victims of Johnson’s offenses were presumably made whole by the restitution order and yet the State, like the United States government in Bajakajian, stands to reap a huge benefit from a fine when the harm it suffered was slight if nonexistent.

I would hold that the civil penalty imposed here also offends the Due Process Clause of the Fourteenth Amendment. Although the United States Supreme Court has not considered whether a punitive fine violates due process, it did, in BMW of N. Am., Inc. v. Gore, 517 U.S. 559, 116 S. Ct. 1589, 134 L. Ed. 2d 809 (1996), set forth a test for determining whether a punitive damage award is so grossly excessive as to violate the clause. The BMW test is remarkably similar to Bajakajian’s excessive fines test and I see no reason why it would not apply here. As noted above, the harm caused to the victims was slight in comparison to the fine. It defies reason that the State, which was not harmed in any tangible way by Johnson’s conduct,11 should obtain a fine that exceeds the amount of the harm caused to the victims by over 15 times.

Apparently recognizing that the fine imposed here was far out of proportion to the harm caused by the defend*611ants’ offenses, the majority attempts to justify it by asserting that the “record contains insufficient data to enable this court to grasp the total gravity of Johnson’s offenses.” Majority op. at 605-06. It is remarkable to me that the majority endeavors to justify this huge fine on the lack of a record and speculation that the “State could have proven far more than the 250 violations listed in its summary judgment motion.” Majority op. at 600. The State presented the case that it did in support of its summary judgment motion and the trial court based its ruling on the State’s submissions.12 That is the record. It is, in my view, entirely inappropriate for this court to provide bootstraps for the State’s argument in the form of speculation about what the State really could have shown if it had simply bothered to do so. The plain fact is that the $500,000 fine is excessive on its face, and it is unsatisfactory to deny relief to Johnson on the basis that he presented insufficient evidence to counter vague assertions that he really caused greater harm than was determined by the trial court. I would hold that the fine violates both the Excessive Fines Clause of the Eighth Amendment and Due Process Clause of the Fourteenth Amendment to the United States Constitution and would, therefore, reverse.

Johnson and Sanders, JJ., concur with Alexander, J.

The majority fails to mention that the trial court imposed a civil penalty on another defendant in the case, DMG Mortgage, in the amount of $1,802,000 and also ordered it to pay restitution costs and attorney fees in an amount in excess of $100,000.

I recognize that the trial court indicated in its summary judgment order that the actions of all of the defendants (WWJ, Johnson, and DMG) caused “substantial injury to the public.” CP at 59. I see nothing in the record, though, that quantifies the degree of injury to the public other than those members of the public who were intended to benefit from the restitution orders. A more telling reason for the extreme fine, one no doubt advanced by the State, is what the trial court described as “the necessity of vindicating the authority of the Attorney General of Washington in enforcing the Consumer Protection Act.” CP at 59.

My review of the record before the court on summary judgment causes me to conclude that the State produced evidence of only 240 violations of which only 219 were included in its request for civil penalties. The 219 violations can be divided into two categories: one is the failure of defendants to place customer funds in trust accounts. The other category is the commingling of operating funds with customer trust funds.