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[U] Commonwealth v. Sommers

Superior Court of Pennsylvania

March 7, 2014

COMMONWEALTH OF PENNSYLVANIA Appellee
v.
NORMA V. SOMMERS Appellant

NON-PRECEDENTIAL DECISION

Appeal from the Judgment of Sentence January 11, 2013 In the Court of Common Pleas of Crawford County Criminal Division at No(s): CP-20-CR-0000434-2012

BEFORE: BENDER, P.J.E., LAZARUS, J., and MUNDY, J.

MEMORANDUM

LAZARUS, J.

Norma V. Sommers appeals from the judgment of sentence[1] imposed by the Court of Common Pleas of Crawford County following her convictions for theft by failure to make required disposition of funds received[2] and misapplication of entrusted property.[3] After careful review, we affirm based on the opinion of the Honorable John F. Spataro.

The trial court set forth the underlying facts of the case as follows:

The Sommers Agency [a partnership formed by Sommers and her husband] received commissions for collecting insurance premiums for Progressive [Insurance] pursuant to their Producer's Agreement dating from 2005. In December 2008, Sommers established an escrow account ("the escrow account" or "account") at First National Bank ("the Bank"), solely for the purpose of depositing those premiums and paying Progressive. She did have, however, the option of forwarding premium checks directly to Progressive, which she exercised prior to opening the escrow account. The account was opened at First National due to non-sufficient fund ("NSF") fees and other problems with prior business accounts at Citizens and PNC Banks.
The account sustained its first NSF fee on January 23, 2009 when checks were inadvertently written on the account against a premium payment deposited into the PNC business account in 2008, and lost to PNC service charges. Sommers, attempting to cover the shortage, on that day deposited her personal check for $2, 900.00 in the account. That check also bounced, and within a week, NSF fee and overdraft charges exceeded two thousand dollars. Another personal check deposited in March to cover an escrow account check (No. 1076) previously made payable to the U.S. Treasury also resulted in Bank NSF fee and overdraft charges.3 Sommers continued to deposit premiums received from customers, along with her own funds totaling $12, 887.62 but was unable to pay Progressive in full due to account debits for bank service charges, which by September 2009 amounted to over forty thousand dollars.
3 Sommers' husband had prepared check no. 1076 as an authorized signor on the account.
Progressive, having sustained losses in the amount of $32, 210.77 (net of unpaid commissions), gave notice of termination and took back the "book of business" from Sommers Agency in mid-August of 2009, thereby terminating Sommers' ability to sell the business for what she hoped would be a substantial profit.4
4 According to her testimony, Progressive policies accounted for seventy percent of her business.

Trial Court Opinion, 3/14/13, at 2-3.

On November 8, 2012, following a two-day trial, a jury convicted Sommers of theft by failure to make required disposition of funds received and misapplication of entrusted property. On January 11, 2013, the court sentenced Sommers to pay fines totaling $700.00, to serve a probationary sentence of 84 months (supervision to terminate after 12 months providing all financial obligations paid in full), and restitution of $32, 210.77 to Progressive.

Sommers filed a timely post-sentence motion, which the court denied by memorandum and order dated March 14, 2013. On April 9, 2013, the trial court issued an opinion pursuant to Pa.R.A.P. 1925(a) in which it referred this Court to its March 14, 2013 opinion.

On appeal, Sommers raises the following issues for our review:

1. Was the evidence sufficient to convict [Sommers] of theft by failure to make required disposition of funds where she did not deal with the property as her own?
2. Was the evidence sufficient to convict [Sommers] of misapplication of entrusted property where she did not dispose of the insurance premiums in a manner that she knew was unlawful and involved a substantial risk of loss to the person for whose benefit the property was entrusted?
3. Did the lower court err in ordering [Sommers] to pay restitution to Progressive Insurance where Progressive Insurance had previously chosen to deliver an item of value, the book of insurance business which had been formerly owned by Sommers' Agency, to another agency without receiving any compensation from that other agency?

Brief of Appellant, at 6.

Where an appellant challenges the sufficiency of the evidence, this Court "must determine whether the evidence and all reasonable inferences deducible therefrom, when viewed in the light most favorable to the verdict-winner . . . are sufficient to establish all elements of the crime charged beyond a reasonable doubt." Commonwealth v. Rakowski, 987 A.2d 1215, 1217 (Pa.Super. 2010) (quoting Commonwealth v. Parker, 957 A.2d 311, 317 (Pa.Super. 2008) (citations omitted)).

Sommers challenges her conviction for theft by failure to make required disposition of funds received, which is defined, as follows, in section 3927(a) of the Crimes Code:

A person who obtains property upon agreement, or subject to a known legal obligation, to make specified payments or other disposition, whether from such property or its proceeds or from his own property to be reserved in equivalent amount, is guilty of theft if he intentionally deals with the property obtained as his own and fails to make the required payment or disposition. The foregoing applies notwithstanding that it may be impossible to identify particular property as belonging to the victim at the time of the failure of the actor to make the required payment or disposition.

18 Pa.C.S. § 3927(a).

The trial court notes there is no dispute that the Commonwealth proved the first two elements of the crime because Sommers obtained premiums from customers with the obligation to remit them to Progressive. The court further explains that Sommers' testimony that she used escrowed premiums to pay business expenses, including banking fees, could allow the jury to infer that she dealt with her customers' and Progressive's money as her own. Furthermore, there is no dispute that Sommers failed to make payments to Progressive. Accordingly, we rely on the trial court's analysis to affirm the conviction. Trial Court Opinion, 3/14/13, at 3-5.

Sommers also challenges her conviction for misapplication of entrusted property, which is defined, as follows, in section 4113(a) of the Crimes Code:

A person commits an offense if he applies or disposes of property that has been entrusted to him, as a fiduciary, or property of the government or a financial institution, in a manner which he knows is unlawful and involves substantial risk of loss or detriment to the owner of the property or to a person for whose benefit the property was entrusted.

18 Pa.C.S. § 4113(a).

As the trial court recognized, Sommers' testimony established that she was aware that by depositing the premiums into the escrow account, some of the funds would be used to pay bank charges rather than Progressive. This caused a substantial risk that the insureds would lose their coverage or that Progressive would lose its premiums. Accordingly, all elements of the offense were established beyond a reasonable doubt. See Trial Court Opinion, 3/14/13, at 6-7.

Sommers also argues that the trial court erred by ordering restitution in the amount of $32, 210.77. She asserts that, having taken the book of business away from her agency, Progressive should have sold it to another agency. She further argues that because the value of the book of business was in excess of $32, 210.77, no restitution should have been ordered.[4]

Section 1106(a) of the Crimes Code provides:

(a) General Rule. – Upon conviction for any crime wherein property has been stolen, converted or otherwise unlawfully obtained, or its value substantially decreased as a direct result of the crime, or wherein the victim suffered personal injury directly resulting from the crime, the offender shall be sentenced to make restitution in addition to the punishment prescribed therefor.

18 Pa.C.S. § 1106(a).

We agree with the trial court that there is no merit to Sommers' position. As an evidentiary matter, Sommers has provided no testimony, other than speculation, that the value of the book of business exceeds the amount of restitution ordered. More importantly, as a matter of law, section 1106 does not require a crime victim to mitigate damages.

Accordingly, we affirm on the basis of the opinion of Judge Spataro, which the parties should attach in the event of further proceedings.

Judgment of sentence affirmed.

Judgment Entered.

IN THE COURT OF COMMON PLEAS OF CRAWFORD COUNTY, PENNSYLVANIA CRIMINAL DIVISION

No. CR 434 - 2012

Kara Colter, Esq., Deputy Attorney General.

Bruce Barret, Esq,, First Assistant Public Defender for Defendant.

MEMORANDUM AND ORDER

John F. Spataro, J.

The Defendant, Norma V. Sommers ("Ms. Sommers"), handled the finances for Sommers Agency, a/k/a Sommers Insurance, an agent for complainant Progressive Insurance ("Progressive"). She was convicted following a jury trial of one count each of theft by failure to make required disposition of funds received, a felony of the third degree, 18 Pa.C.S. § 3927, and of misapplication of entrusted property, a second degree misdemeanor. Id., § 4113, Ms. Sommers has moved post-sentencing for judgment of acquittal, alleging insufficiency of the evidence to sustain her convictions on either count, [1] or in the alternative, for a new trial. In addition, she objects to making restitution to Progressive as required by the terms of her sentence. Our review of the record convinces us that there is sufficient evidence upon Which the jury could find her guilty, and that the weight of that evidence supports her criminal convictions. We dismiss Ms. Sommers' motion including her objection to making restitution for the reasons set forth in this Memorandum.

The facts pertinent to the motion are as follows: Sommers Agency received commissions' for collecting insurance premiums for Progressive pursuant to their Producer's Agreement dating from 2005.[2] In December 2008, Ms. Sommers established an escrow account (the "Escrow Account" or "Account") at First National Bank (the "Bank"), solely for the. purpose of depositing those premiums and paying Progressive. She did have, however, the option of forwarding premium checks directly to Progressive, which she exercised prior to opening the Escrow Account. The Account was opened at First National due to non-sufficient fund ("NSF") fees and other problems with prior business accounts at Citizens and PNC Banks, The Account sustained its first NSF fee on January 23, 2009 when checks were inadvertently written on the Account against a premium payment deposited into the PNC business account in 2008, and lost to PNC service charges, Ms. Sommers, attempting to cover the shortage, on that day deposited her personal check for $2, 800 into the Account. That check also bounced, and within a week, NSF fee and overdraft charges exceeded two thousand dollars, Another personal check deposited in March to cover an Escrow Account check (No. 1076) previously made payable to the U.S. Treasury also resulted in Bank NSF fee and overdraft charges.[3] Ms, Sommers continued to deposit premiums received from customers, along with her own funds totaling $12, 887.62, but was unable to pay Progressive in full due to Account debits for Bank service charges, which by September 2009 amounted to over forty thousand dollars.

Progressive, having sustained losses in the amount of $32, 210.77 (net of unpaid commissions), gave notice of termination and took the "book of business" from Sommers Agency in mid August of 2009, thereby terminating Ms. Sommers' ability to sell the business for what she hoped would be a substantial profit.[4]

I. Motion for Judgment of Acquittal

A. The offense of failure to make required disposition of funds received is defined as follows:

A person who obtains property upon agreement, or subject to a known legal obligation, to make specified payments or other disposition, whether from such property or its proceeds or from his own property to be reserved in equivalent amount, is guilty of theft if he intentionally deals with the property obtained as his own and fails to make the required payment or disposition....

18 Pa.CS.A, § 3927(a), The four elements of the crime are thus: (1) obtaining property of -another (2) subject to an agreement or known legal obligation to make specified payment or other disposition thereof, (3) intentionally dealing with such property as one's own, and (4) failing to make the required payment or disposition. Commonwealth v. Crqfton; 1092, 1094-95, 240 Pa.Super. 12, 16 (1976).

There is no dispute that the first two elements of the crime have been proven: Ms, Sommers (1) obtained insurance premiums from her customers, (2) with the obligation to remit them to Progressive pursuant to the Producer's Agreement. She contends, however, that the Commonwealth failed to prove beyond a reasonable doubt that she intentionally dealt with those premiums as her own property, and that the failure to make the required payments to Progressive was due solely to Bank service charges. These contentions arc without merit.

We are guided in our analysis by the analogous case of Commonwealth v, Shapiro, 418 A.2d 594, 275 Pa.Super. 28 (1980). Mr. Shapiro, owner of Shapiro Monuments, accepted payment for stones, inscriptions, or plaques from various customers who never received the items for which they paid, nor refunds. The carving, lettering, and setting of stones were done by the firm of Christianson and Sons, for which Shapiro Monuments acted as agent or intermediary, When contract payments were not made, the Christianson firm removed sample stones and various business property and records from the office of Shapiro Monuments, thereby allegedly putting the company out of business. The appellate court affirmed Mr. Shapiro's conviction of failing to make required disposition of funds received, finding sufficient evidence of his having intentionally dealt with at least a portion of the collected payments as though they were his own by cashing some of his customer's checks to pay expenses. 418 A.2d at 596-98, 275 Pa, Super, at 32-35.[5]

Ms, Sommers testified that the use of escrowed premiums to pay business expenses, such as office rent, was impermissible, and agreed that banking fees were business expenses. She acknowledged that the commissions and other funds she had paid into the Account were insufficient to cover Banks charges, just as they had been with the previous PNC business account. Importantly, she admitted that she does not owe the Bank any money because its service charges were taken out of her customers' premium payments. Trial Transcript at 137, 174-79, The jury could properly infer that by failing to replenish the Account and allowing a portion of collected premiums to be applied against Bank charges, she intentionally' dealt with her customers' and Progressive's money as her own, thereby fulfilling the third element of the offense.[6]

There is no 'dispute that the required payments to Progressive were not made, Contrary to Ms. Summers' assertions, the failure to pay Progressive in full was not due to Bank service charges, but instead the result of her failure to cover those charges, Ms. Sommers maintains that she had expected deductions from her commissions to cover service charges, and even borrowed from her daughter and contributed some of her commissions to keep Sommers Agency operating. Trial Transcript at 152, 166, 175. Mr, Shapiro likewise testified that he had not intended to defraud customers, and had frequently borrowed from family members and elsewhere to remain in business. The Shapiro Court explained that criminal liability nevertheless attached when the required payments to the Christianson firm were not made, resulting in non-delivery to Shapiro Monument's customers. Shapiro, 418 A, 2d at 598, 275 Pa, Super, at 35.[7]

The record reflects that the Commonwealth established beyond a reasonable doubt both contested elements of the crime of failure to make required disposition of funds received. Shapiro holds that when all of the elements of this theft crime are present, the offense does not criminalize a business venture that simply failed. Id. (citing Commonwealth v. Crqfton, supra).

B. Misapplication of entrusted property is defined by the Crimes Code as follows:

A person commits an offense if he applies or disposes of property that has been entrusted to him as a fiduciary, or property of the government or of a financial institution, in a manner which he knows is unlawful and involves substantial risk of loss or detriment to the owner of the property or to a person for whose benefit the property was entrusted.

18 Pa.C.S.A.§4113.

Ms. Sommers acknowledges that insurance premiums were entrusted, to her as a fiduciary, but maintains that they were not disposed of in a manner she knew to be unlawful because they were deposited into an escrow account, [8] Mere deposit of all entrusted funds into the Account does not negate her knowledge of the unlawfulness of their application to business expenses, rather than to paying the intended recipient, Progressive.

A person acts knowingly when she is aware that her actions are practically certain to cause the unlawful act, 18 Pa.C.S.A. § 302(b)(ii). Ms. Sommers testified that she opened the First National Account because of the Sommers Agency's problems with service charges at other financial institutions; charges at PNC Bank had exceeded forty thousand dollars, and the account there carried a negative balance. She "knew that we would have to do something different, " and decided to sell the agency, but eight months later had only a draft agreement offered by a potential buyer for discussion purposes. Trial Transcript at 129-33, 135; attachment to Defendant's Memorandum of Law [in support of the Motion].

The jury could well conclude that Ms, Sommers was fully aware that at least some premiums were practically certain to be used to pay Bank service charges rather than Progressive, thus creating a substantial risk that insureds would lose their coverage and/or Progressive its premiums. The knowledge component of misappropriation was therefore satisfied when she failed to maintain the Account balance, knowing that service charges were swallowing entrusted funds and creating substantial risk of loss to Progressive as premium owner or detriment to her customers for whose benefit the premiums were entrusted.

Ms, Sommers would have us excuse her conduct because of hopes of selling the business for $200, 000, thereby enabling her to pay Progressive in full. Those plans do not diminish the sufficiency of the evidence supporting her conviction, She can no more complain that Progressive thwarted her plans to replace premiums lost to Bank service charges with sale proceeds, than Mr. Shapiro could argue that he was prevented from filling his customers' orders by the Christianson firm putting him out of business. Shapiro, 418 A.2d at 596, 275 Pa. Super, at 31. The inchoate sate, rather than being exculpatory, supplied the motive for her crimes, II. Motion for New Trial

Ms, Sommers also contends that the verdict was contrary to the weight of the evidence, [9]For a new trial to be awarded, the verdict must be so contrary to the evidence as to "shock one's sense of justice." Rivera, 603 Pa. at 362, 983 A, 2d at 1255. We are not unmindful that Ms. Sommers failed to gain personally from the offenses for which she was convicted, and suffered detriment in the loss of her agency, [10] but conclude that her culpability justifies the jury's verdicts.

Because of previous banking problems, Ms, Sommers opened a new bank account that quickly accumulated service charges exceeding two thousand dollars. She continued using that account another six months knowing of deductions for the escalating bank charges, and resulting deficits to Progressive, despite haying other options for dealing with her customer's premiums, " Her justification was her hope of eventually selling the agency's accounts for a substantial profit. Notified that her book of business would be withdrawn if payment was not made within ten days, she waited until after the deadline expired before informing Progressive of a prospective sale. Trial Transcript at 157-60, 164.

The Bank Account, moreover, being an escrow account, placed her in a fiduciary t capacity with respect to its maintenance. Her intentional deposit of a personal check for $2, 800 behind which she knew there were insufficient funds was, in her words, ''grasping at straws, " and gave rise to the initial risk of loss or detriment. Trial Transcript at 134, 150. That risk was compounded by the NSF check made payable to the U.S. Treasury, and the loss became a reality upon her failure to cover Escrow Account deficits. In choosing to ignore the risks to both her customers and Progressive on the basis of some future sale of the business, Ms. Sommers exhibited the conduct that the Crimes Code intended to suppress. We find no facts in this case, and none are directed to our attention that, "notwithstanding all the evidence, are so clearly of greater weight that to ignore them, or to give them equal weight with all the facts, is to deny justice.[11] Rivera, 603 Pa. At 362, 983 A.2d at 1255.

III. Restitution

Ms. Sommers objects to paying any restitution, arguing that Progressive could have recovered its losses simply by selling the withdrawn book of business to another agency. No evidence was offered on how or when such a sale might have been accomplished, or whether Progressive ever dealt in sales to potential agents. Any value that Ms. Sommers places on that book of business is moreover purely speculative. Even if Progressive could have sold the Sommers Agency's book of business for value, the Crimes Code does not require a victim to mitigate its damages. See 18 Pa.C.S.A, § 1106.

Ms. Sommers does not dispute that premiums in the amount of $46, 138.05 went unpaid to Progressive, and accepts the deduction of $13, 927.28 In commissions otherwise owed her, Accordingly, we decline to disturb the amount of restitution awarded.

ORDER

AND NOW, this 13th clay of March 2013, for the reasons set forth in the foregoing Memorandum, the following is ORDERED:

1) The Defendant's Post-Sentence Motion is DENIED.

2) The Defendant is advised that she has a right to file an appeal to the Superior Court, Any such appeal must be filed within thirty (30) days from this date or these matters become final, 3) The Defendant has the right to assistance of counsel in the preparation of an appeals If she chooses to engage in her right to appeal. If Defendant cannot afford counsel of her own, she has the right to appeal in forma pauperis and counsel will be appointed for purpose of the appeal.

Pa, R.A.P. 1925 OPINION

AND NOW, this 5lh day of April, 2013, the Court has received and reviewed the Statement of Errors Complained of On Appeal in the above captioned case and notes that the issues raised on appeal were previously addressed by this Court's Memorandum and Order of March 13, 2013. This Court draws the attention of the Superior Court to the Memorandum and Order of March 13, 2013, a copy of which is attached hereto.


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