The California Court of Appeal affirmed two judgments in favor of the firm’s client, Sacramento Municipal Utility District, in civil power theft cases seeking damages for the diversion of electricity. The civil power theft statute, Civil Code section 1882 et seq., provides utilities with the ability to recover three times actual damages, as well as attorneys’ fees and costs. The statute was enacted in 1981 to provide utilities with a means of recovering damages incurred by theft and to deter future thefts.
In Sacramento Municipal Utility District v. Torres, SMUD obtained a judgment in its favor to recover damages for unmetered electricity that was diverted by a customer at two residences in the Sacramento area used for marijuana grows. The defendant conceded that he bypassed SMUD’s meter to divert power, but he disputed the extent of the theft, claiming that he only stole power for a short period of time and that the grow at one of the properties was confined to one room. The case was tried in the Sacramento Superior Court and resulted in a decision in SMUD’s favor on its claims for power theft under Civil Code section 1882, conversion and breach of contract. The defendant was ordered to pay treble damages, costs and attorneys’ fees to SMUD.
The defendant appealed, arguing that the trial court committed error by refusing to apply the doctrine of issue preclusion which he claimed prevented SMUD from relitigating the duration of the theft because the criminal court ordered him to pay restitution to SMUD in an earlier criminal case. Torres claimed that SMUD could not seek civil damages for a longer theft period than what was ordered by the criminal court in determining restitution. However, the Court of Appeal found that the Sacramento Superior Court was correct in finding that issue preclusion did not apply.
Citing the California Supreme Court’s decision in Samara v. Matar (2018) 5 Cal.5th 322, the Court explained that issue preclusion “applies only ‘(1) after final adjudication (2) of an identical issue (3) actually litigated and necessarily decided in the first suit and (4) asserted against one who was a party in the first suit or one in privity with that party.’” (Samara at p. 327.) SMUD, as the victim, was not a party in Torres’ criminal case nor was it in privity with the People who prosecuted the case. The People did not act as SMUD’s “virtual representative” in the restitution proceeding. As the Court noted, restitution orders aim to compensate the victim, but they also are intended to rehabilitate the defendant and deter the defendant and others from committing future offenses. The decision makes clear that a criminal restitution order does not limit the utility’s ability to litigate the amount of the theft in a civil case.
The Court of Appeal also determined that substantial evidence supported the damages award. The Court cited its recent decision in another case handled by the firm, Sacramento Municipal Utility District v. Kwan (2024) 101 Cal.App.5th 808, 815, a published opinion discussed in more detail below. In Kwan, the Court recognized that in utility theft cases there is ongoing injury causing damages, yet the period of injury may be uncertain due to the very nature of the activity. While the utility must prove the fact of proximately caused injury with reasonable certainty, “the measure of damages to be awarded need only be shown with the degree of certainty that the circumstances of the case permit.” A defendant who is liable for “utility diversion should not benefit from the secrecy of his or her theft”. (Kwan, at p. 816.) In Torres, SMUD put on eyewitness evidence from a family member who observed the grow operation at one of the properties, it presented smart meter data analytics, as well as other evidence supporting both the period of the theft and the amount of electricity stolen.
The Kwan case also involved an appeal from a judgment in SMUD’s favor under the civil power theft statute. The case had a long procedural history, having been tried twice – once in 2015 and again in 2022. The defendant claimed his identity was stolen and someone else opened a SMUD account in his name at a residence in Sacramento. The meter was bypassed to steal power to operate a marijuana grow. On appeal, Kwan contended that the trial court’s finding that he aided and abetted power diversion was not supported by substantial evidence. The Court of Appeal did not agree, finding that there was substantial evidence supporting the verdict in SMUD’s favor, as the evidence supported a reasonable inference that Kwan aided and abetted the grow operation and power theft.
The measure of damages awarded by the trial court including trebling SMUD’s actual damages was also at issue on appeal. The Court determined that SMUD established it suffered injury from the date the account was created as there was substantial evidence that the account was set up exclusively for the grow operation. The trial court did not abuse its discretion in trebling the actual damages and awarding attorney fees, both of which are permitted by the controlling statute, Civil Code section 1882.2. Kwan petitioned to the California Supreme Court, who declined to hear the matter.
The appeals were handled by George E. Murphy, one of the firm’s founding shareholders, now Of Counsel for Quinn Covarrubias. Shareholder Stephanie L. Quinn tried the cases, and she also handled the appellate argument in front of the California Court of Appeal in the Kwan case.
