COA holds that costs to investigate crime are recoverable as restitution, but not attorney fees.
State of Wisconsin v. Mary E. Melstrom, 2023AP1176-CR, 2/17/26, District III (ineligible for publication); case activity
The COA affirmed a restitution award to cover the victim insurance company’s costs of investigating the cause of a house fire that was the subject of the defendant’s criminal charge but reversed the award for the victim’s attorney fees.
Mary Melstrom was convicted of misdemeanor negligent handling of burning material and ordered to pay $28,247.85 in restitution; $15,520.35 for investigatory fees that Badger Mutual Insurance paid to uncover the cause of the house fire and $11,364.57 for Badger Mutual’s attorney fees. (¶ 1). Melstrom argued on appeal that the investigatory and attorney fees were not recoverable under the restitution statute, Wis. Stat. § 973.20(5). She also argued that the ten-percent surcharge for which she was assessed should not have applied because she paid the entire amount of restitution before the restitution hearing. (¶ 1).
Section 973.20(5)(a) authorizes the circuit court to require a defendant to pay “special damages . . . which could be recovered in a civil action against the defendant for his or her conduct in the commission of a crime considered at sentencing.” For a restitution order to be valid: 1) the defendant’s criminal activity must have been a substantial factor in causing the pecuniary injury to the victim; and 2) the damages must be “special,” which are pecuniary expenditures paid because of the crime and not “general” damages such as pain and suffering. (¶ 12).
The COA held that the investigatory fees were properly assessed as “special” damages. Citing its 1999 decision in Holmgren, the COA held that the expert and investigatory fees paid by Badger Mutual to “uncover the extent of Melstrom’s wrongdoing constitutes ‘special damages’ under Wis. Stat. § 973.20(5)(a).” (¶ 15).
However, the COA reversed the award to cover Badger Mutual’s attorney fees. Citing its 2004 decision in Longmire, the COA held that the “American Rule generally precludes recovery of attorney fees in civil actions.” (¶ 17). Because Badger Mutual would not be entitled to recover attorney fees in a civil action against Melstrom, its attorney fees did not qualify as “special” damages under the restitution statute. (¶ 19).
Although Melstrom paid restitution to Badger Mutual before it was awarded by the circuit court, the COA found that the “plain language” of § 973.06(1) imposing the ten-percent surcharge was automatic and mandatory because it states that the costs, fees, and surcharges taxable against the defendant “shall” consist of an amount equal to ten percent of any restitution ordered. (¶ 23).