Some time ago our firm had a client that was sued by a private business. The factual allegations in the operative complaint alleged that our client conspired with his wife to steal the private business’ products and sell them online. There were several causes of action asserted against our client in the civil lawsuit, but the more significant cause of action was Receipt of Stolen Property and Damages under Penal Code §496. That’s right, a Plaintiff in a civil lawsuit accused our client of committing a violation of the California Penal Code.
It seems that most people don’t know that the California Penal Code allows for a person to bring a civil lawsuit for damages. Not only can a person seek actual damages, but they can also seek punitive damages up to three times that amount plus attorney’s fees and costs. These costs can quickly escalate. “The statute, as enacted, broadly allows anyone injured by the sale of the knowingly stolen property to bring a civil action against the seller, to reduce thefts by eliminating the market for stolen goods.” (Citizens of Humanity, LLC v. Costco Wholesale Corp., (2009) 171 Cal.App.4th 1, 18). Additionally, “a criminal conviction [for receipt of stolen property] is not a prerequisite to recovery of treble damages.” (Bell v. Feibush, (2013) 212 Cal.App.4th 1041, 1042). A person accused is not out of the woods Just because the District Attorney’s office decides not to file. A civil lawsuit may very well be in the works.
Under California Penal Code §496(a) “[e]very person who buys or receives any property that has been stolen or that has been obtained in any manner constituting theft or extortion, knowing the property to be so stolen or obtained, or who conceals, sells, withholds, or aids in concealing, selling, or withholding any property from the owner, knowing the property to be so stolen or obtained …” Criminally speaking this crime is a wobbler meaning it can be either a misdemeanor or a felony. But criminal prosecution may be only the beginning. California Penal Code §496(c) states, “[a]ny person who has been injured by a violation [of this statute] may bring an action for three times the amount of actual damages, if any, sustained by the plaintiff, costs of suit, and reasonable attorney’s fees.” Usually, civil cases of this type require a ton of attorney work so not only can a person be on the hook for three times the actual damages but also for the Plaintiff’s attorney’s fees and costs which could be in the hundreds of thousands of dollars.
For a Plaintiff to prove their case they must show:
“1) The defendant (bought/received/sold/aided in selling/ concealed or withheld from its owner/aided in concealing or withholding from its owner) property that had been (stolen/obtained by extortion) and;
2) When the defendant (bought/received/sold/aided in selling/ concealed or withheld/aided in concealing or withholding) the property, (he/she) knew that the property had been (stolen/obtained by extortion).” (Calcrim No. 1750). One should pay particular attention to the knowledge requirement. The Court, in defining knowledge, has said that “[a]mong the several definitions of ‘knowledge’ are the following: ‘the fact or condition of being cognizant, conscious, or aware of something’; ‘the scope of one’s awareness’; ‘extent of one’s understanding’; ‘the fact or condition of apprehending truth, fact, or reality immediately with the mind or senses.” (People v. Reyes, (1997) 52 Cal.App.4th 975, 983).
The Punitive Damages Issue
It is unclear as to whether the treble damages allowed under the statute is considered punitive damages or simply part of the statutory damages. Of course, I contend it is punitive. If I am correct, the Plaintiff will have some work to do. First, the purpose of punitive damages “is a purely public one. The public’s goal is to punish wrongdoing and thereby to protect itself from future misconduct, either by the same defendant or other potential wrongdoers.” (Adams v. Murakami, (1991) 54 Cal.3d 105, 110). “The function of punitive damages is not served by an award which, in light of the defendant’s wealth and the gravity of the particular act, exceeds the level necessary to properly punish and deter.” (Id. at 110). “It is for this reason the Supreme Court articulated a standard calling for meaningful evidence of a defendant’s financial condition” in determining the amount of a punitive damages award. (Lara v. Cadag, (1993) 13 Cal.App.4th 1061, 1064). If you are being sued civilly for receipt of stolen property, it is essential that you retain counsel who understands how punitive damages work. Otherwise, you could find yourself the victim of a massive punitive damages award.
Chances are if you are sued for receipt of stolen property Plaintiff has also asked for punitive damages under California Civil Code §3294 as well. Under California Civil Code §3294 “where is it proven by clear and convincing evidence that the defendant has been guilty of oppression, fraud, or malice, the plaintiff, in addition to the actual damages, may recover damages for the sake of example and by way of punishing the defendant.” Notice here that the burden of proof is elevated, which means that in order to recover punitive damages the fraud must meet a higher standard of proof than the underlying receipt of stolen property claim.
With punitive damages, discovery tends to become an issue because as a Defendant your finances are now discoverable. Typically, financial resources receive protection according to privacy rights but because they are a factor in punitive damages cases they are discoverable.
The Bottom Line
When being sued for damages under California Penal Code §496, it is vital to retain counsel. The financial exposure is massive. If it is possible to remove any element required to prove receipt of stolen property, then a Defendant is entitled to a verdict in their favor. It is vital that one retains the right attorney when defending against this cause of action. If you have been sued, you need to get in front of the lawsuit as fast as you can. You will need a lawyer and a law firm that understands the law and a track record of success. Here at Fitzgerald & Campbell, APLC we understand the law, and we know how to fight cases in and out of Court. We can provide you with the defense you deserve.