How to Properly Calculate Restitution

In State v. Irwin, 2016 UT App. 144, the Court addressed how to properly calculate restitution of retail goods stolen from a retail dealer.

Defendant pleaded guilty a theft related crime for being in possession of 102 watches stolen from a Sandy, Utah watch shop.  The watches were individually valued from $79-$2,500 apiece. At a restitution hearing, the State presented evidence that the MSRP value of the watches was $39,004, but the replacement cost was $13,651.40.  Insurance calculated the loss at $35,155.48. The State argued that restitution should be based on the MSRP or insurance calculations. Defendant argued that restitution should be based on replacement cost.

A trial court's restitution order is reviewed for abuse of discretion.  A court abuses its discretion when no reasonable person would take the view adopted by the trial court.

For restitution, a victim is limited in recovering pecuniary damages. Pecuniary damages are demonstrable economic injury which a person could recover in a civil action. Valuation generally includes the fair market value of of the property in question. Fair market value is often measured by what the owner is willing to receive and a buyer is willing to pay.  Compensation is awarded for actual losses.

The Court ruled that purchase price/replacement cost is a better measure of a victim's loss than retail value when the victim has the ability to replace the stolen items for much less than retail value. In these situations, awards greater than retail value violate the common law principle that compensation is only available for the injury suffered.

Limiting restitution in this case prevents the victim from realizing a windfall. If the stolen merchandise was compensated for at resale value, the victim could replace the watches, pocket the excess, and still sell the watches for a profit, thereby realizing a double profit.

Because restitution was awarded in excess of replacement cost, the award was vacated and the case remanded to the trial court for a new award consistent with the Court's opinion.