United States Court of Appeals,
Eleventh Circuit.
Nos. 94-2231, 94-2232.
UNITED STATES of America, Plaintiff-Appellee,
v.
APEX ROOFING OF TALLAHASSEE, INC., Defendant-Appellant.
UNITED STATES of America, Plaintiff-Appellee,
v.
Lisa Jean DOXSEE, Defendant-Appellant.
April 17, 1995.
Appeals from the United States District Court for the Northern
District of Florida. (No. 93-03109/LAC), Lacy A. Collier, Judge.
Before BIRCH and DUBINA, Circuit Judges, and JOHNSON, Senior
Circuit Judge.
PER CURIAM:
This appeal presents the issue of whether restitution is
appropriate when the victim of the crime charged has sustained no
financial loss. The district court awarded restitution to the Navy
from the contracting individual and corporate defendants resulting
from a terminated work contract, although the Navy incurred no
financial loss. We VACATE and REMAND.
I. BACKGROUND
Defendant-appellant Lisa Jean Doxsee was president, treasurer
and secretary of corporate defendant-appellant Apex Roofing of
Tallahassee, Inc. ("Apex"), a Florida corporation. Approximately,
September, 1991, the United States Department of the Navy awarded
Apex the contract to replace or repair the roofs on two buildings
at Naval Air Station, Whiting Field in Milton, Florida. The
original contract price was $103,000.00.
Apex commenced work approximately the end of January, 1992.
It ordered on credit most of the materials for the project from
Huls America, Inc. ("Huls") in New Jersey.1 The total amount was
approximately $35,000.00.
The Navy paid Apex as the work progressed. To receive a
progress payment, the Navy required Apex to submit an invoice
documenting the costs of materials and labor for the project to
date. The Navy also required Apex to certify that "[p]ayments to
subcontractors and suppliers have been made from previous payments
received under the contract, and timely payments will be made from
the proceeds of the payment covered by this certification." When
this documentation was submitted, the Navy's job site inspectors
would verify the proper percentage of the contract work that had
been completed, and the Navy issued a progress payment based on
that percentage.
During Apex's performance on the contract, the Navy made four
progress payments to Apex.2 Before receiving each of these
payments, Apex submitted a certificate stating that the
3
subcontractors or suppliers had been paid. The Navy paid Apex
1
Although during the course of performing the contract, Apex
received some materials and/or services on credit from other
companies, the greatest amount was owed to Huls.
2
The Navy made the following payments to Apex based on the
percentage of the work completed: (1) $43,005.00 on March 12,
1992, based on 42% completion, (2) $8,660.00 on March 31, 1992,
based on 50% completion, (3) $20,199.00 on May 26, 1992, based on
67% completion, and (4) $11,000.00 on June 5, 1992, based on 75%
completion.
3
On the first two payments, this certificate was signed by
Apex's vice-president; on the last two payments, the certificate
$82,864.00 based on completion of seventy-five percent of the
project.4
Approximately at the time of the last payment, Apex stopped
work on the contract. The immediate cause of the work stoppage was
the discovery of asbestos in the area where Apex had been working.
This would have required a modification of the contract to account
for the removal of the asbestos.
Additionally, Apex was experiencing serious financial
difficulties. Payments from the Navy were assigned to Apex's bank
to satisfy loans that had been made to Apex.5 Because of cash flow
problems, Doxsee was using available cash to pay her employees and
for necessary expenses. Finally, Apex could not pay its employees
and, consequently, could not continue to work on the Navy project
or any other project. No subcontractors, however, were unpaid.
Doxsee filed for personal bankruptcy.
Apex did not stop work on the Navy contract because of any
action taken by any supplier of materials; essentially Apex had
the necessary materials to finish the project at the work site.
When Apex could not finish the project, the Navy terminated the
contract and completed the work with its own personnel. The Navy
was signed by Doxsee.
4
We are cognizant that $82,864.00 is more than 75% of the
original contract price of $103,000.00, a difference of
$5,614.00. Nevertheless, the Navy determined the progress
payments to Apex based on its evaluation of the percentage of the
contract work completed. The Navy also did not file a claim for
having paid for more than 75% of the contract price and receiving
less than that percentage of work completed by Apex.
Accordingly, we will use the Navy's determination of 75% as being
the amount of work completed on the project by Apex.
5
The Navy was aware of this assignment.
even used materials that had been left at the work site by Apex.
After Apex stopped work on the contract, the Navy learned that Apex
had not paid all of its suppliers as it had certified before
receiving each progress payment.6 Doxsee and Apex were indicted
for this offense in violation of 18 U.S.C. § 1001 and pled guilty.
The presentence report ("PSR") recommends that, if Doxsee and
Apex were ordered to make restitution, then that restitution should
go to Apex's bonding company and suppliers.7 Because they had pled
guilty to submitting a false certification to the Navy, Doxsee and
Apex objected to their PSRs and contended that the Navy was the
only victim.8 Further, they argued that no restitution was owed to
the Navy because it had suffered no loss as a result of the
offense. They maintained that they had earned all the funds
received from the Navy because work had been performed on the
contract of equal value.
Doxsee also raised the issue of her inability to pay
6
It was determined that Apex still owed $32,932.59 to Huls,
$2,296.07 to Lowes, $1,060.00 to Burleson Van Lines, and
$1,414.96 to Clark Sand Company. Apex's bonding company,
International Fidelity Insurance Company, subsequently paid Huls
and Lowes a total of $35,229.63 pursuant to the payment bond that
Apex had purchased before being awarded the contract. The
bonding company did not pay Burleson Van Lines and Clark Sand
Company a total of $2,474.96.
7
The PSR recommended that $35,229.63 should go to Apex's
bonding company, $1,060.00 to Burleson Van Lines, and $1,414.96
to Clark Sand Company. This was total restitution in the amount
of $37,704.59. The Navy did not file a claim for the cost to
complete the project.
8
Doxsee and Apex argued that determining the amounts owed to
the bonding company and to suppliers was a civil matter between
Apex and these companies. Doxsee and Apex contended that they
had not been charged with misappropriating funds that should have
gone to suppliers, but with not telling the Navy that suppliers
had not been paid.
restitution. Responding to the initial PSR recommending a fine and
restitution, Doxsee stated that she was financially unable to pay
a fine or restitution. While the amended PSR recognizes that
"Doxsee may not have the financial ability to pay the bonding
company," it nevertheless states that "she definitely has the
ability to pay the individual victims in the instant offense."
Doxsee PSR at 25, ¶ 99. Concerning Apex's ability to make
restitution, the PSR notes that the corporation had been dissolved
and did "not have the financial ability to make restitution in this
case." Apex PSR at 13, ¶ 51.
At sentencing, the district court specifically found that
"there was not more than one victim," R3-45, and that, when "the
crime was committed the United States Government was the victim,"
R3-64. Nevertheless, the district court ordered Doxsee and Apex to
pay restitution of $37,704.59 each, the total amount owed to the
bonding company and suppliers, not to the Navy. While the district
judge appeared to recognize that the Navy had not suffered actual
loss in this amount, R3-63-65, he seemed to reason that the Navy
potentially could lose this amount if the unpaid suppliers
repossessed the roofing work completed or materials because they
had not been paid. At sentencing, the district judge expressed his
concern for potential loss to the Navy in response to Doxsee's
attorney's explanation that the Navy had received the work for
which it had paid:
MR. KEITH: My point is at the time, the money she received
for this contract of 80 something thousand dollars, the Navy
received the same amount of work from Apex or Ms. Doxsee.
THE COURT: That's where we're talking about the facts, again.
They did not, because in the Court's opinion they don't own
the roof that's put up there and the suppliers could come in
and unshingle the roof and take it away and that is the loss.
So the Government was in fact out, and unless somebody paid
the supplier, then they still own the roof, they can come get
it and take it back.... They have the right to do that, so
that's the loss.
R3-65 (emphasis added).9
Although the district judge recognized that neither Doxsee nor
Apex had the ability to pay a fine, R3-2,6, he nevertheless ordered
restitution of $37,704.59 from each:
[A]s to Apex Roofing.... I do find there is no need to place
the corporation on probation because it has been dissolved.
I do find there's limited, if any, financial ability, and
therefore a fine will be waived. However, I am going to order
restitution, for what it's worth, in the amount of
[$]37,704.59....
[A]s to defendant Lisa Doxsee.... it's the judgment of
the Court that you be committed to the custody of the Bureau
of Prisons to be imprisoned for a term of six months.... And
upon release be placed on a period of supervised release for
a period of three years.... In addition, [Doxsee] shall make
restitution in the amount of $37,704.59. That will be due and
payable to the United States Government and their
responsibility to determine the ultimate receiver of that
amount.
R3-59-60 (emphasis added). In ordering restitution of both Doxsee
and Apex, the district judge gave no reviewable findings of how
Doxsee or Apex could actually pay the restitution designated.
Instead, the district judge represents that "I'm trying to send a
message to all of those that deal with the United States
Government. The Government is not an entity that you take
advantage of." R3-66. Doxsee and Apex timely appealed their
respective sentences regarding restitution to the Navy.
II. DISCUSSION
9
The court further suggested that the Navy may have a
responsibility to use the restitution to reimburse the bonding
company and the suppliers. R3-60.
We review a district court's order of restitution for abuse
of discretion. United States v. Husky, 924 F.2d 223, 225 (11th
Cir.), cert. denied, 502 U.S. 833, 112 S.Ct. 111, 116 L.Ed.2d 81
(1991). Using restitution as part of a sentence is governed by the
Victim and Witness Protection Act ("VWPA"), 18 U.S.C. §§ 3663-3664.
Under 18 U.S.C. § 3663(a)(1), a district court is authorized to
order a defendant to make restitution to any victim of the criminal
offense for which the defendant is convicted. In determining
whether to order restitution under section 3663 of this title and
the amount, the district court "shall consider the amount of the
loss sustained by any victim as a result of the offense, the
financial resources of the defendant, the financial needs and
earning ability of the defendant and the defendant's dependents,
and such other factors as the court deems appropriate." 18 U.S.C.
§ 3664(a) (emphasis added). We have determined that the statute
directs the sentencing court to consider not only the victim's
injury, but also the financial condition and earning ability of the
defendant to pay restitution. United States v. Barnette, 10 F.3d
1553, 1556 (11th Cir.), cert. denied, --- U.S. ----, 115 S.Ct. 74,
130 L.Ed.2d 28 (1994). Consequently, we have required that the
district court evaluate a defendant's financial situation and
ability to pay before determining the restitution amount. United
States v. Cobbs, 967 F.2d 1555, 1558 (11th Cir.1992) (per curiam);
United States v. Stevens, 909 F.2d 431, 435 (11th Cir.1990).
Significantly, under Hughey v. United States, 495 U.S. 411,
413, 110 S.Ct. 1979, 1981, 109 L.Ed.2d 408 (1990), we have held
that the "district court is authorized to order restitution only
for the loss caused by the specific conduct underlying the offense
of conviction. " Cobbs, 967 F.2d at 1559 (emphasis added); see
United States v. Young, 953 F.2d 1288, 1289 (11th Cir.1992) ("A
court therefore exceeds the scope of its authority under the VWPA
when it orders restitution for uncharged offenses." (emphasis
added)); United States v. Stone, 948 F.2d 700, 704 (11th Cir.1991)
("[W]e hold that a restitution order under the VWPA may not exceed
the loss attributable to the specific conduct that is the basis of
the offense of conviction." (emphasis added)). "When the offense
involves making a false statement, the inquiry to determine loss
must focus on the amount of loss related to the false statement....
The task of the district court is to determine the amount of loss
that is attributable to [the defendant's] criminal conduct."
United States v. Wilson, 980 F.2d 259, 262 (4th Cir.1992). The
sentencing court "may not authorize restitution even for like acts
significantly related to the crime of conviction." Young, 953 F.2d
at 1289.
In this case, Doxsee and Apex pled guilty to making false
statements to the Navy in violation of 18 U.S.C. § 1001. The
district court found that the Navy was the only victim of this
crime. The $37,704.59 restitution amount, however, for both Doxsee
and Apex represents the losses to Apex's bonding company and
suppliers and not to the Navy.10 This is not the federal crime to
10
Before Apex was awarded the contract to repair or replace
two roofs for the Navy at Whiting Field for $103,000.00, it had
to purchase a performance bond and a payment bond. "
"[P]erformance bonds' guarantee that the contractor will complete
the project in accordance with the specifications; and "payment
bonds' ensure that those who furnish labor and materials for the
project will be paid." See United States v. Stern, 13 F.3d 489,
which Doxsee and Apex pled guilty.
Indeed, the Navy appears to have sustained no loss whatsoever,
financial or otherwise. The Navy paid Apex on the performance
contract only for the percentage of the work that had been
completed or $82,864.00 for seventy-five percent of the work
instead of $103,000.00 for a hundred percent of the work. When
Apex had to stop work on the contract because of the asbestos
problem and its financial difficulties, the Navy terminated the
contract11 and completed the project using its own personnel and
materials left at the job site by Apex. The Navy clearly received
a benefit of value that it considered equal to the amount of money
that it paid to Apex. To uphold the district court's restitution
orders of $37,704.59 for Doxsee and Apex, we would have to find
that the Navy suffered an actual loss in these amounts as a result
of the offense. If the Navy were to receive $37,704.59 from either
Doxsee or Apex, then it would have a windfall.
The district judge's speculation as to potential loss to the
Navy from repossession of materials by suppliers is problematic for
two reasons. First, the $37,704.59 restitution amount is the
alleged loss to the bonding company and suppliers; the actual loss
491 n. 1 (1st Cir.1994).
11
Since Apex could not have continued work on the contract
at the time that stoppage occurred because of the discovery of
asbestos, the Navy essentially terminated the contract for
convenience and not for default. Thus, the reason Apex stopped
work on the contract was not because it had not paid its
suppliers or had certified falsely that it had paid its
suppliers, but because of the asbestos problem. The Navy
apparently terminated the contract because it wanted to complete
the project without the delays that would have been occasioned by
modifying the contract because of finding asbestos.
to the Navy would have to be determined when and if such
repossession were ever found to be authorized under applicable law,
which we doubt would occur. Second, we are unconvinced that
suppliers would or could gain access to a secure naval base for the
purpose of exercising self-help, even if available. By recognizing
that the Navy was the only victim with no apparent financial loss,
the district judge could not award restitution to the Navy based on
amounts owed by Apex to its bonding company and suppliers.12 Thus,
the restitution award in any amount to the Navy for Doxsee and Apex
was an abuse of discretion.13
Even if restitution were appropriate, the district court
further erred by not evaluating the financial condition and ability
to pay of Doxsee and Apex. Although the judge observed that
neither Doxsee nor Apex had the ability to pay a fine, he
12
The suppliers' recourse would be to seek payment from the
bonding company pursuant to the payment bond. See United States
ex rel. Pertun Const. Co. v. Harvesters Group, Inc., 918 F.2d 915
(11th Cir.1990) (discussing the right of suppliers of a
government contractor to seek payment from the bonding company
under the Miller Act because federal buildings are exempt from
liens). In this case, Apex's bonding company paid two suppliers
a total of $35,229.63. The other two unpaid suppliers never
filed a claim with the bonding company. Consequently, the
bonding company and the two suppliers suffered a loss because of
Apex's financial problems and not because of conduct violating 18
U.S.C. § 1001. The criminal offense is not that Apex failed to
pay its suppliers. That is a civil matter between Apex, the
suppliers, and the bonding company. The criminal offense is that
Apex told the Navy that it had paid its suppliers when it had
not. Any loss to the suppliers or the bonding company was not
caused by this offense and cannot be considered a loss to the
Navy for Sentencing Guidelines purposes.
13
Ironically, at sentencing a discussion occurred concerning
negotiations by representatives of Apex with the Navy regarding
the possibility that the Navy still owed Apex money for work
performed on the contract. R3-48. Any money owed by the Navy to
Apex would be paid to the bonding company and not to Apex.
inconsistently required each to pay a sizeable restitution amount.
While an indigent defendant can be ordered to pay restitution if it
appears that there is a future ability to earn or acquire money,
Stevens, 909 F.2d at 435, a dissolved corporation does not have
such ability.14 The district judge "apparently focused only on the
amount of loss to the victim[s]" other than the Navy, the only
victim covered by the offense of conviction, and did not consider
Doxsee and Apex's future ability to pay the ordered restitution as
required by section 3664(a). United States v. Newman, 6 F.3d 623,
631 (9th Cir.1993).
III. CONCLUSION
Appellants Doxsee and Apex contend that they erroneously were
ordered to make restitution to the Navy for false certification
that suppliers had been paid on a roofing contract. Because the
Navy suffered no financial loss and paid Apex on its roofing
contract only for the benefit that it determined that it received,
we VACATE and REMAND with instructions to eliminate the respective
restitution orders for the reasons discussed herein.
14
Under the Sentencing Guidelines, a court can order an
organization to pay restitution only if it is authorized under 18
U.S.C. §§ 3663-3664. U.S.S.G. § 8B1.1(a)(1).