State v. Morse

2008 SD 66, 753 N.W.2d 915, 2008 S.D. LEXIS 107, 2008 WL 2766080

• Court: South Dakota Supreme Court
• Decided: July 16, 2008
• Docket: 24614
• Status: Published

Opinions

KONENKAMP, Justice.

[¶ 1.] Wyatt Morse agreed to convert Janice Heffron’s second-floor room into a small bathroom. He said his plumbing work would be above and beyond code and that he could complete the project in five weeks for $5,000. After ten weeks, the project was not finished. Morse quit without explanation. He had been paid in excess of $6,000. Afterwards, Janice learned that some of the work he did was faulty. Morse was charged and convicted of theft by deception. On appeal, we reverse because there was insufficient evidence from which a jury could infer that Morse had the intent to defraud.

Background

[¶ 2.] Janice Heffron purchased a home in Deadwood, South Dakota. It was listed on the historical registry and was originally her grandfather’s. She planned on remodeling and restoring the structure. In the fall of 2005, Janice hired Ricardo Trevino to work on the exterior. Janice also wanted a room on the second floor converted into a small bathroom. Trevino indicated that he could likely complete the project for between $7,000 and $10,000, but he did not provide a formal bid.

[¶ 3.] Wyatt Morse was Janice’s neighbor and had come to her house while Trevino was working. Through discussions with Janice, Morse learned about her desire to have a second-floor bathroom. He proposed to convert the second-floor bedroom into a bathroom in five weeks for $5,000. According to Janice, Morse “stalked” her about doing the remodeling project, repeatedly stating he could do it “easy, quick, cheap.” Nonetheless, Janice told her mother, Maxine Heffron, who would finance the project, about Morse’s offer. Maxine and Janice then went to Morse’s home, where he showed them the bathroom he had restored. Janice and Maxine were impressed. Morse also told them that he had plumbing experience, that his work would be above and beyond code, and that the local inspector did not inspect his work because he was so good.

[¶ 4.] In December 2005, Janice, Maxine, and Morse made an oral agreement for him to complete the project in five weeks for $5,000, with payments in cash installments. Maxine wanted to pay using personal checks to assure a paper trail, but Morse convinced her to pay him with cash. According to Janice, he wanted to be paid in cash to avoid the IRS. They agreed that Morse would convert the room into a bathroom, install an antique claw-foot tub (one that he would provide personally), put wainscoting on the walls, install an old tin ceiling like the one in his bathroom, and install crown molding.

[¶ 5.] Morse began work in January 2006. His efforts continued until the second week of March. He repaired the kitchen ceiling and wall. He installed plumbing fixtures in the area he repaired. He removed the old water heater and installed a new one. He ran a freeze-proof spigot outside the house. He put in a bathroom vent with an antique vent cover. He custom built a bathroom cabinet at no extra cost to the Heffrons. He mounted wainscoting and crafted a surrounding shelf with rope lighting. He put in a faux tin ceiling, with crown molding and trim. He installed water pipes and a new drain stack.

[¶ 6.] The project took longer and cost more than originally agreed. Morse ran into difficulties when he attempted to install a tankless water heater that Maxine was aware took approximately two weeks effort. He was never able to install the tankless heater, and ended up installing a traditional tanked water heater. Morse also experienced problems with some of the pipes he installed. Janice told him that they were leaking. He repaired them and blamed the leaks on bad batches of solder.

[¶ 7.] Maxine paid Morse somewhere between $6,000 and $6,500 cash. Her last payment was on February 28, 2006. Some of the cash, she said, was for “off contract” materials that were not part of the contract price. In March 2006, Morse fell and aggravated his already bad back. Before Janice and Maxine hired him, Morse had told them that he had a back condition. After his fall in March, he came to the job site less and less. Then, after the second week in March he stopped coming entirely. The Heffrons tried contacting him through phone calls, personal visits, and certified mail. He never responded.

[¶ 8.] After Morse abandoned the project, Janice contacted a licensed plumber, who examined Morse’s work and gave Janice an estimate on the cost of completing the project. The plumber pointed out several deficiencies in Morse’s work. In particular, Morse incorrectly installed the water heater, the pipes for the sink, lavatory, and bathtub. He used S-traps, illegal in South Dakota, and improperly vented the floor drains. Because he installed the water heater incorrectly, carbon monoxide was leaking into Janice’s home. In sum, Morse’s work on the bathroom, in the opinion of the licensed plumber, had no value to the home.

[¶ 9.] On October 12, 2006, Morse was indicted for grand theft by deception in violation of SDCL 22-30A-3(l) and SDCL 22-30A-3(3), or in the alternative, grand theft by obtaining property without paying. The alternative count was later dismissed. A Lawrence County jury returned a guilty verdict. Morse admitted to a Part II Information and was sentenced to five years in prison. He appeals asserting that the evidence was insufficient to sustain the verdict.

Standard of Review

[¶ 10.] Our de novo standard of review on a sufficiency claim is well established:

“[A]ll of the evidence is to be considered in the light most favorable to the prosecution.” Jackson v. Virginia, 443 U.S. 307, 319, 99 S.Ct. 2781, 2789, 61 L.Ed.2d 560 (1979) (emphasis in original). There must be substantial evidence to support the conviction. Glasser v. United States, 315 U.S. 60, 80, 62 S.Ct. 457, 469, 86 L.Ed. 680 (1942), superseded on other grounds, Bourjaily v. United States, 483 U.S. 171, 107 S.Ct. 2775, 97 L.Ed.2d 144 (1987). The “inquiry does not require [an appellate] court to ‘ask itself whether it believes that the evidence at the trial established guilt beyond a reasonable doubt.’ ” Jackson, 443 U.S. at 318-19, 99 S.Ct. at 2789, 61 L.Ed.2d 560 (emphasis in original) (quoting Woodby v. Immigration and Naturalization Serv., 385 U.S. 276, 282, 87 S.Ct. 483, 486, 17 L.Ed.2d 362 (1966)). “Instead, the relevant question is whether, after viewing the evidence in the light most favorable to the prosecution, any rational trier of fact could have found the essential elements of the crime beyond a reasonable doubt.” Id. Evidence is insufficient, and therefore not substantial, when no rational trier of fact could find guilt beyond a reasonable doubt. Id.

State v. Tofani, 2006 SD 63, ¶37, 719 N.W.2d 391, 401.

Analysis and Decision

[¶ 11.] Morse argues that the State failed to prove he had the requisite intent to defraud the Heffrons. He does not dispute that the work he did on Janice’s home was faulty and resulted in the Heffrons having to pay considerably more in repairs. Nonetheless, he claims that his faulty work created a classic breach of contract claim, because when he entered into the agreement to remodel the bathroom, he believed he was capable of doing quality work and fully intended on completing the project. The State, on the other hand, argues that Morse “created and reinforced the false impression in the minds of Jan and Maxine Heffron that he was licensed to, and capable of, installing a second floor bathroom.” More particularly, the State contends that Morse “deceived” the Heffrons on his ability to do the work, “misled” them with his statements that his work would be above code, and “took actions to further reinforce the false impression that he was able to properly install the bathroom.”¹

[¶ 12.] Theft by deception is a specific intent crime. State v. Heftel, 513 N.W.2d 397, 400 (S.D.1994) (citing State v. Klein, 444 N.W.2d 16, 19 (S.D.1989)). Intent to defraud “ ‘means to act willfully and with the specific intent to deceive or cheat, ordinarily for the purpose of either causing some financial loss to another or bringing about some financial gain to one’s self.’ ” Id. (quoting State v. DeWall, 343 N.W.2d 790, 792 (S.D.1984)). Therefore, Morse must have had the “purpose to deceive.” See State v. Hurst, 507 N.W.2d 918, 920 (S.D.1993). “ ‘It is only where [actors do] not believe what [they] purposely caused [their victims] to believe, and where this can be proved beyond a reasonable doubt, that [these actors] can be convicted of theft.’ ” Id. (quoting Model Penal Code § 223.3 cmt 3(b)).

[¶ 13.] In State v. Fyffe, the Ohio Court of Appeals ruled there was insufficient evidence to convict the defendant for knowingly depriving the victim of property, i.e., money, by deception, despite the fact that the defendant took money and did not perform. 67 Ohio App.3d 608, 588 N.E.2d 137, 141 (1990). Fyffe agreed to do numerous home repairs for Dollie Traugotthad. Id. at 139. After he completed the first set of repairs, he and Dollie talked about some additional work, and he agreed to resurface and install a turn-around in the driveway. After Fyffe did some of the work, he left and never returned. Fyffe was indicted for grand theft for obtaining over $6,000 from Dollie by deception. At trial it was alleged that Fyffe overcharged for his work, failed to complete some of the promised work, and, according to expert testimony, performed below acceptable standards. Id. at 141. The trial court found him guilty of theft by deception. In reversing the conviction, the court ruled that “[s]imply because [Fyffe] charged more for his work than someone else might have, and simply because [he] did not complete the work in accordance with [the expert’s] standards does not prove that [Fyffe] knowingly deprived [Dollie] of services or her money by deceiving her.” Id. at 141-42. Moreover, the court concluded that “[t]here is no evidence that [Fyffe] deceived [Dollie] by misrepresenting to her that he was giving her a ‘deal’ on the price he charged for his work, that he never intended to do the work, or that he would do the work in a specific manner and then did it in some other way.” Id. at 142. If anything, the court concluded, the matter was a breach of contract case. Id.

[¶ 14.] An Alabama court also reversed a defendant’s conviction of theft by deception. Smith v. State, 665 So.2d 1002 (Ala. Cr.App.1995). The court held that the evidence was insufficient to show that the defendant intended to deprive the victim when the victim gave him money in return for his promise to screen print seventy-two shirts. Id. at 1004. Although the project was never completed and the defendant spent the money on personal needs, the court stated that the defendant intended to perform at the time he obtained the money. Id. at 1003. If the defendant had had a history of this type of conduct, the court would have upheld his conviction. Id. at 1003 (citing Baker v. State, 588 So.2d 945, 947 (Ala.Cr.App.1991)). Further, the court noted that “[a]n affirmance under the facts presented in this case would only serve to cast prosecutors in the role of judgment collectors and encourage potential civil litigants to seek a remedy in a criminal court in the form of restitution.” Id. at 1004.

[¶ 15.] There are a number of cases involving construction contracts where courts have found the evidence sufficient to prove deceptive theft, or related criminal conduct. In those cases, however, there was either circumstantial or direct evidence to establish the requisite intent. For example, in Cash v. United States, an appeals court held that the jury could infer intent when at the time Cash obtained the money he had no intention to complete the work because he took the money and never performed. 700 A.2d 1208, 1211-12 (D.C.Ct.App.1997). In State v. Rivers, the Iowa Supreme Court upheld the defendant’s conviction for theft by deception because he had a pattern of deceptive conduct. 588 N.W.2d 408, 410-11 (Iowa 1998). Rivers was a self-employed contractor, who obtained multiple remodeling jobs, took money-as a down payment, persuaded his customers to give him more money, and then never completed the work. According to the court, “[t]he evidence suggests that when Rivers had milked the customer for as much as appeared possible, he never showed up again.” Id. at 412. In Craver v. State, the Wyoming Supreme Court disagreed that Craver’s failure to perform was merely a civil matter. 942 P.2d 1110, 1114-15 (Wyo.1997). According to the court, “Craver’s actions were more than mere nonperformance” because he knew he could not perform the work and took the money after deceiving his victims that he could. Id. at 1114.

[¶ 16.] Here, Morse was convicted of theft by deception, defined in SDCL 22-30A-3. It states in part:

[a]ny person who obtains property of another by deception is guilty of theft. A person deceives if, with intent to defraud, that person:

(1) Creates or reinforces a false impression, including false impressions as to law, value, intention, or other state of mind. However, as to a person’s intention to perform a promise, deception may not be inferred from the fact alone that that person did not subsequently perform the promise; ...

(3) Fails to correct a false impression which the deceiver previously created or reinforced, or which the deceiver knows to be influencing another to whom the deceiver stands in a fiduciary or confidential relationship; ...

The term, deceive, does not, however, include falsity as to matters having no pecuniary significance or puffing by statements unlikely to deceive reasonable persons.

Id. (emphasis added). In Hurst, we noted that SDCL 22-30A-3 is similar to section 223.3 of the Model Penal code, requiring that the accused have a purpose to deceive. 507 N.W.2d at 920. The accused must act willfully and with the specific intent to defraud. Heftel, 513 N.W.2d at 400.

[¶ 17.] Based on our review of the record, in a light most favorable to the verdict, Morse: (1) failed to complete the project in five weeks for $5,000 as promised; (2) performed work that was not “above and beyond code” as promised; (3) lied about obtaining a building permit; (4) lied about the reasons he could not get the tankless water heater installed and why the pipes were leaking; (5) returned the water heater and did not give the $186 refund to Maxine;² (6) never provided Janice or Maxine receipts for materials purchased; (7) quit working on the project prematurely and without explanation; and (8) never responded to the Heffrons’ attempts to contact him.³

[¶ 18.] These facts do not prove the elements of theft by deception. There is no evidence that Morse had a purpose to deceive or intended to defraud the Heffrons when he agreed to remodel Janice’s bathroom. Although his work was not above and beyond code, the State never argued that Morse knew he would do faulty work.⁴ Janice and Maxine both testified that Morse took them up to his house and showed him the remodeling that he did to his own bathroom. They both said they were impressed. It cannot be inferred that Morse intended to defraud the Heffrons because his work product was not up to code. See Fyffe, 588 N.E.2d at 141-42 (substandard work does not result in inference of intent to defraud).

[¶ 19.] Moreover, the State never argued or presented evidence that Morse took Maxine’s money with the intention of never performing under their agreement. See Smith, 665 So.2d at 1003 (taking money and not performing without a previous history of that pattern of conduct is insufficient to establish intent); Rivers, 588 N.W.2d at 410 (pattern of deceptive conduct can lead to inference of intent to defraud); but see Cash, 700 A.2d at 1211— 12 (intent to defraud could be inferred). The parties made their agreement in December 2005, and no one disputes that Morse worked regularly on the project from January 2006 until the second week of March. While Morse failed to complete the project in five weeks for $5,000 as promised, the State never claimed that he knew it would take longer and charge more, and tricked the Heffrons into believing him. Neither Janice nor Maxine claimed that Morse deceived them into paying him more money when the project took longer than anticipated. See Rivers, 588 N.W.2d at 411-12. Rather, Maxine testified that “[hjaving had construction done before, I knew it was going to run more money than you really anticipate.... So I figured right up front when he said $5000, five weeks, I thought, oh this is going to run me probably $7000, $8000 to get that bathroom done. And I think that’s why, when he needed more money, I didn’t hesitate.”

[¶ 20.] Morse did keep a $186 refund after returning the tankless water heater, which was rightly Maxine’s money, but this fact alone does not prove that Morse intended to defraud the Heffrons when he agreed to do the project. Morse also lied to Janice and Trevino in saying that he had obtained a building permit. Janice and Trevino testified, however, that the conversation took place in March, and because the last payment Morse received from Maxine was February 28, 2006, the false representation about the building permit could not have deceived the Hef-frons into parting with more money.

[¶ 21.] The facts of this case are analogous to Fyffe, 588 N.E.2d at 141, and Smith, 665 So.2d at 1003-04, where each court held that there was insufficient evidence to sustain the conviction because no evidence established that the defendant possessed the requisite intent. Similarly, in this Court’s past cases, there was either direct evidence of the defendant’s intent to defraud or the court identified specific circumstantial evidence establishing that at the time the property was obtained the defendant acted with the requisite intent. See State v. Phair, 2004 SD 88, 684 N.W.2d 660 (defendant knew her representations were false when she made them to obtain loans); Heftel, 513 N.W.2d at 400-401 (circumstantial evidence established defendant knew the bank overpaid him when he took the money); Hurst, 507 N.W.2d at 921-22 (evidence existed that defendants knew they were not going to burn the waste when they purposely made their victims believe they would); Klein, 444 N.W.2d at 19 (defendant had two prior convictions for theft by deception that were relevant to establish motive and intent in the principal crime). Mere nonperformance does not equal intent to defraud.

[¶ 22.] To sustain a conviction, each element of an offense must be supported by evidence. See State v. Plenty Horse, 2007 SD 114, ¶¶8-9, 741 N.W.2d 763, 766. Theft by deception is a specific intent crime, and therefore, the State was required to prove beyond a reasonable doubt that Morse had the specific intent to defraud the Heffrons when he agreed to remodel the bathroom. Here the evidence offered by the State “is so insubstantial and insufficient, and of such slight probative value, that it is not proper to make a finding beyond a reasonable doubt that [Morse] committed all of the acts constituting the elements of the offense[.]” See Fyffe, 588 N.E.2d at 141.

[¶ 23.] Reversed.

[¶ 24.] SABERS and MEIERHENRY, Justices, concur. [¶25.] ZINTER, Justice, concurs with a writing. [¶ 26.] GILBERTSON, Chief Justice, dissents.

1 . The State also asserts that because Morse was legally required to have a plumbing license and building permit, but had neither, "he deceived the Heffrons as to matters of law,” in violation of SDCL 22-30A-3(l). The State cannot make this claim on appeal. At trial, the State never argued that Morse deceived the Heffrons as to matters of law. Moreover, the jury was not instructed that it could consider whether Morse created a false impression as to law. Despite appellate counsel's belief that the facts support an additional theory of guilt, this Court has long held that it will not consider issues for the first time on appeal. See Schull Constr. Co. v. Koenig, 80 S.D. 224, 229, 121 N.W.2d 559, 561 (1963).

2 . Apparently relying on the State’s appellate brief, the dissent claims that Morse purchased products at Menards on Maxine’s credit card without her permission. Nothing in the record supports this. At trial, Janice was asked, "And how were these [materials] being purchased at Menards?” She responded, “Either my mother would write a check or use her credit card.” Maxine testified that she, Morse, and Janice "went out to Menards and we would make purchase of what he needed, and we used the credit card.” Maxine did testify about the $186 refund from returning the tankless water heater, but neither Maxine nor Janice claimed that Morse purchased materials with their credit cards without their permission.

3 . According to the State, Morse also created the false impression that he was a licensed plumber. The testimony does not support this claim. Janice testified that Morse only told her he was in the process of getting his license. Therefore, Janice was aware when she hired Morse that he was not a licensed plumber.

4 .The dissent contends that Morse made false statements on the value of his services, which “brought his statements within the scope of SDCL 22-30A-3.” See dissent, infra ¶ 35. Morse, however, was not charged with defrauding the Heffrons as to "value,” but rather as to "intention.” In State v. Quinn, we reversed a conviction for theft by deception when we concluded that the evidence did not support the conviction as charged. 2001 SD 25, ¶ 25, 623 N.W.2d 36, 40. Although SDCL 22-30A-3 provides several ways theft by deception can be established, the evidence must support the crime as charged. "The prosecutor in this case [Quinn] focused exclusively on theft by deception perpetrated by misrepresenting the law” and the "count did not allege additional instances, based on either fact or statute, in which theft by deception could be proven.” Id. Likewise, here the State alleged that Morse deceived the Heffrons as to intention and the jury was instructed only on deception as to intention. Therefore, like Quinn, we cannot consider whether the facts would support an alternative conviction under an additional theory as the dissent would propose.