January 9, 2015
STATE OF IOWA, Appellee,
BEAU JACKSON MORRIS, Appellant
Appeal from the Iowa District Court for Polk County, Christopher L. McDonald, Judge. Inmate appeals rescission by the district court of prior order increasing restitution payments deducted from his prison earnings.
Beau Morris, Clarinda, Pro se.
Thomas J. Miller, Attorney General, Kevin R. Cmelik and William A. Hill, Assistant Attorneys General, and John P. Sarcone, County Attorney, for appellee.
CADY, Chief Justice.
In this appeal, a prison inmate challenges a decision of the district court to rescind its prior order that increased the amount of restitution deducted from his prison earnings. In deciding this case, we must interpret Iowa Code section 904.809(5) (2013) governing deductions from earnings by inmates employed by private industry. On our review, we reverse the order of the district court.
I. Background Facts and Prior Proceedings.
Beau Morris was convicted of first-degree robbery and second-degree sexual assault in 2004. He was sentenced by the district court to two consecutive twenty-five-year terms of incarceration. The district court also ordered him to pay restitution in an amount in excess of $16,000. Initially, Morris was required to pay twenty percent of all credits to his institutional account as restitution. This order was later modified to fifteen percent of his income.
In 2011, Morris began working for a private employer through the Iowa Prison Industries program. He was paid a wage in excess of $10 per hour for the work he performed. This employment allowed him to earn significantly more than he was paid for performing labor for the prison. Morris signed a work agreement as part of his application for employment with Iowa Prison Industries. Under the agreement, Morris agreed that fifteen percent of his gross wages would be deducted for restitution, " unless otherwise specified." 
On July 30, 2012, Morris petitioned the district court to modify the restitution plan to allow him to pay a greater amount for restitution from his private-employment earnings. He requested that fifty percent of his earnings be paid as restitution. The district court granted the request and ordered the Iowa Department of Corrections (DOC) to increase the restitution deduction to fifty percent on August 15, 2012.
The DOC did not immediately comply with the order and eventually filed a motion with the district court requesting that it be rescinded. The district court, under a different presiding judge, granted the motion and rescinded the prior order modifying restitution. The court rejected the State's argument that federal law limited the total restitution deduction amounts to twenty percent, but held that the modified restitution order violated the state statutory scheme for the distribution of inmate earnings from private-sector employment. The district court reinstated the prior restitution plan that set the amount of restitution at fifteen percent of his earnings. The district court declined to address the
additional claim made by the State that the employment agreement executed by Morris precluded any modification of restitution.
Morris appealed. He raises two issues. First, Morris claims the district court abused its discretion by rescinding the modified restitution order. Second, he claims the employment agreement did not preclude a modification of restitution. The State argues the district court properly rescinded the modified restitution order and asserts the issue of whether the modified restitution order violated the employment agreement was not properly before the court in this appeal.
II. Standard of Review.
Our review of a restitution order is for abuse of discretion. " 'Abuse of discretion may be shown where . . . the court's . . . decision is grounded on reasons that are clearly untenable or unreasonable.'" Office of Citizens' Aide/Ombudsman v. Edwards, 825 N.W.2d 8, 14 (Iowa 2012) (quoting Citizens' Aide/Ombudsman v. Grossheim, 498 N.W.2d 405, 407 (Iowa 1993)). " A ground or reason is untenable . . . when it is based on an erroneous application of the law." Id. (citation and internal quotation marks omitted); accord Bottoms v. Stapleton, 706 N.W.2d 411, 415 (Iowa 2005) (" A court abuses its discretion when its ruling is based on clearly untenable grounds, such as reliance upon an improper legal standard or error in the application of the law." ). " When reviewing a restitution order, 'we determine whether the court's findings lack substantial evidentiary support, or whether the court has not properly applied the law.'" State v. Klawonn, 688 N.W.2d 271, 274 (Iowa 2004) (quoting State v. Bonstetter, 637 N.W.2d 161, 165 (Iowa 2001)). Statutory construction is reviewed for correction of errors at law. State v. Dudley, 766 N.W.2d 606, 612 (Iowa 2009).
The resolution of this case requires us to consider the private-employment program for inmates in Iowa prisons. While prison inmates have historically earned very meager wages for performing labor while in prison, private employment opportunities for inmates now offer jobs that pay substantially higher wages. See Iowa Code § 904.809(1)(c); Noah D. Zatz, Working at the Boundaries of Markets: Prison Labor and the Economic Dimension of Employment Relationships, 61 Vand. L. Rev. 857, 870-71 & n.49 (2008) [hereinafter Zatz]. However, inmates are only permitted to receive a portion of the wages paid. Iowa Code § 904.809(5)( b )-( c ). Most of the earnings are distributed to other entities designated by statute pursuant to a declared statutory priority scheme. Id. § 904.809(5). Under this distribution scheme, the amount distributed to a recipient with priority over another recipient can reduce the amount ultimately distributed to the lower-priority recipient. See id. In this case, the State challenged the authority of the district court to modify a restitution order that increased the statutory distribution of an inmate's earnings for restitution because it resulted in a decrease in the statutory distribution of the inmate's earnings to the DOC as reimbursement for supervision costs of private-employment programs and to the general fund of the state as reimbursement for the costs of incarceration. We first review the private-employment program to shed light on the resolution of this case.
Congress authorized the Prison Industry Enhancement Certification Program as part of the Justice System Improvement Act of 1979. Pub. L. No. 96-157, § 827, 93 Stat. 1167, 1215 (codified at 18 U.S.C. § 1761(c) (1982)).
Generally, this program joined private industry with prison industry by exempting qualified correctional systems from the existing legislative restrictions on the interstate transportation and sale of prison goods and generally allowing the unrestricted sales of goods produced by inmates. See James J. Misrahi, Note, Factories with Fences: An Analysis of the Prison Industry Enhancement Certification Program in Historical Perspective, 33 Am. Crim. L. Rev. 411, 412 (1996). The program, among other things, established a minimum wage and authorized deductions of up to eighty percent of the inmate's wages for taxes, room and board, support, and victim compensation funds. Id. at 412-13. The program was originally authorized in only five states, but has expanded to include over forty participating jurisdictions, including Iowa. Zatz, 61 Vand. L. Rev. at 869 n.37; see also Prison Industry Enhancement Certification Program Guideline, 64 Fed. Reg. 17,000, 17,002 (Apr. 7, 1999).
The Iowa legislature established the Iowa State Industries program in 1977. 1977 Iowa Acts ch. 87 (codified at Iowa Code ch. 216 (1979)). The private prison industry program in Iowa is codified in Iowa Code section 904.809 (2013). This section establishes the conditions for private industry employment by inmates of correctional institutions in Iowa and includes provisions relating to the specific deductions from the earnings of inmates. Id. Overall, the total earnings of inmates, less the employee deductions for taxes and other payroll deductions, are surrendered to the DOC, which then identifies the deductions pursuant to the statutory scheme contained in section 904.809(5)( b ). Id. § 904.809(5). Under this scheme, an inmate's gross payroll earnings are distributed as follows:
(1) Twenty percent, to be deposited in the inmate's general account.
(2) All required tax deductions, to be collected by the inmate's employer.
(3) Five percent, to be deducted for the victim compensation fund created in section 915.94.
Id. § 904.809(5)( b ).
After these deductions are made, the remaining balance is distributed pursuant to a separate priority scheme. Id. § 904.809(5)( c ). First, any dependent support obligation of the inmate is deducted from the remaining balance. Id. Up to a maximum of fifty percent of the inmate's net earnings can be deducted for monthly spousal and child support obligations, as well as any amount for delinquent child support. Id. From the remaining funds after this priority is satisfied, an amount is deducted for any restitution ordered by the court pursuant to an offender plan of restitution. Id. § 904.809(5)( c )(2). If funds remain after the restitution order is satisfied, the DOC may retain up to fifty percent of this balance. Id. § 904.809(5)( c )(3). The purpose of this deduction is to reimburse the DOC for the staff supervision costs of private-sector
employment of inmates. See id. Finally, any funds that might remain after this deduction are deposited in the general fund of the state. Id. § 904.809(5)( c )(4). The purpose of this deduction is to reimburse the state for the costs of the inmate's incarceration.
The statute is clear and unambiguous. Specifically, it means that restitution pursuant to a plan established by the court takes priority over any amounts that may be retained by the DOC or deposited in the general fund of the state. There is no dispute under the statute that restitution trumps funding for the DOC, just as dependent support orders trump restitution plans. Additionally, funds are paid out under the statute after the three required payments identified in section 904.809(5)( b ) only to the extent that the greater priority deductions established by the legislature have been satisfied.
Thus, we turn to the specific dispute before us in this case. The district court rescinded its prior order that modified restitution after it determined the modified terms of restitution were contrary to the statutory scheme prioritizing the distribution of earnings. It held the modified restitution order altered the statutory distribution scheme by making restitution the first deduction.
In deciding whether the order to rescind the modified restitution was based on an erroneous application of law, it is important to recognize that the modified restitution order only increased the amount of restitution from fifteen percent of earnings to fifty percent of earnings. This modification did not address the issue of priority in any way and expressed no intent for restitution to be elevated to the first deduction in violation of the statute. The prior restitution plan, which was reinstated by the district court when it rescinded the modified order, directed fifteen percent of wages to be paid, and the modified order only increased the percentage of payment. A district court is authorized to modify restitution payments. See id. § 910.7(2). Additionally, the statutory scheme for wage deductions for inmates in the prison industry program does not limit the percent of net earnings that can be deducted for restitution. See id. § 904.809(5)( c )(2); see also Iowa Admin. Code r. 201-20.11(7) (limiting restitution deductions to fifty percent of credits to offender's account).
It is also important to recognize that Morris did not have any deductions for dependent support. As a result, the only deductions higher in priority than restitution were the statutorily required twenty percent to his inmate account, taxes, and the five percent deduction for the victim restitution fund. Accordingly, the modified restitution order was not contrary to the distribution scheme for inmate private-sector employment under the statute. The modified restitution order did not alter any of the categories of distribution with a greater priority under the statute, but merely increased the amount distributed for restitution, which left a lesser amount for the DOC and the state's general fund. See Iowa Code § 904.809(5)( c )(3)-(4). However, this result is a consequence of the judgment of our legislature to compensate victims of crimes and other recipients of restitution before permitting the DOC to be reimbursed for its costs of supervising the private-sector employment of inmates and the state to be reimbursed for the costs of incarceration.
This analysis reveals that the decision by the district court to rescind the amended restitution order was based on reasoning that constituted legal error. Contrary to the reasoning of the district court in the rescission hearing, the amended restitution order was not contrary to the governing statutory scheme. While the district court had discretion to amend the restitution order and rescind or modify the amended order, it had no discretion to rescind the amended order based on legal error. See Bottoms, 706 N.W.2d at 415.
We have discretion to affirm the district court on grounds raised at trial but not on appeal. See King v. State, 818 N.W.2d 1, 11 (Iowa 2012). However, we decline to do so in this case by considering whether the decision of the district court can be affirmed on the ground that the modified restitution order was contrary to the employment agreement. The State affirmatively elected not to pursue this issue, and there is no underlying supporting record. Under the circumstances, we consider the issue waived on appeal.
Accordingly, the district court order rescinding the modified restitution order was an abuse of discretion. We reverse the district court decision to rescind the modified restitution order without prejudice to the State to seek further modification of Morris's restitution.
We reverse the decision of the district court.