PATRICIA HEARN AND JAMES HEARN V. COMMONWEALTH OF KENTUCKY
Annotate this Case
Download PDF
RENDERED: JUNE 13,2002
TO BE PUBLISHED
A
2000-SC-0865DG
PATRICIA HEARN AND
JAMES HEARN
V.
ON REVIEW FROM COURT OF APPEALS
99-CA-2638-MR
JEFFERSON CIRCUIT COURT NO. 98-CR-2403
COMMONWEALTH OF KENTUCKY
_ APPELLEE
OPINION OF THE COURT BY JUSTKE WINTERSHEIMER
AFFIRMING
This appeal is from a decision of the Court of Appeals which reversed and
remanded an order of the circuit court which had denied the motion of the
Commonwealth to charge interest on court-ordered restitution in a criminal case.
The sole issue is whether the trial courts of Kentucky have the authority to order
post-judgment interest to be paid on the principal amount of restitution until the amount
is paid in full under KRS 533.030(3).
James and Patricia Hearn pled guilty to twelve counts of theft by failure to make
required disposition of property received in violation of KRS 514.070, and one count of
theft by deception under KRS 514.040. The Hearns admitted to having converted to
their own use more than $300,000 that had been entrusted to Patricia as a deputy
superintendent of the Jefferson County schools.
As part of her official duties, Patricia Hearn conducted business dealings with the
private foundation known as the “Jefferson County Public Education Foundation,” a
private fund-raising organization which had been created to make possible the purchase
of computers, encyclopedias and other resources for the schools of Jefferson County.
Beginning in May 1994, Patricia Hearn began requesting checks from the Foundation in
order to purchase encyclopedias and CD-ROM packages for the schools. Between
May 1994 and September 1997, she requested and received twelve checks from the
Foundation totalling over $400,000. These checks were to pay for 350 sets of
encyclopedias and CD-ROM packages. At her request, the checks were made out to
F.F. Enterprises and were deposited into the F.F. Enterprises bank account. F.F.
Enterprises then issued checks to either James Hearn or Hearnco International, a
company owned by James Hearn. The schools received only 58 sets of encyclopedias
and no CD-ROM packages.
In 1999, the defendants pled guilty to the charges. The circuit judge sentenced
each to ten years in prison but probated the sentences. One of the conditions of
probation was that the Hearns pay restitution to the Jefferson County Public Education
Foundation.
Subsequent to the guilty pleas, the trial judge recognized that counsel had
agreed that $322,485 was owed in restitution, with an additional $10,000 eventually
added for the accounting fees incurred by the foundation. The Commonwealth
requested that the defendants be ordered to pay interest in addition to the principal
amount owed, but the trial judge denied the request stating that there was no criminal
-2-
statute providing for interest on restitution. The trial judge observed ‘I. . . if this Court
found existing Kentucky law to justify it, it would order the Hearns to pay interest in a
heartbeat.” The prosecution appealed from the order denying the motion to pay interest
on restitution and the Court of Appeals reversed the relevant portions of the order and
remanded for additional proceedings. This Court accepted discretionary review.
The Hearns argue that there is no statutory authority or case precedent that
permits the addition of interest on orders of restitution in criminal cases. They contend
that case law from other jurisdictions supports their position and that the ruling of the
Court of Appeals has far reaching, negative implications. The prosecution responds
that the statutes are to be liberally interpreted so as to give full effect to the intent of the
legislature and that the ability of the circuit court to order interest on restitution serves
both judicial economy and traditional notions of fair play and justice. Our responsibility
is to interpret KRS 533.030(3).
I. Construction of Statutes
KRS 533.030 provides for restitution when a defendant is given probation or
conditional discharge. KRS 533.030(3)
provides in pertinent part:
When imposing a sentence of probation or conditional
discharge in a case where a victim of a crime has suffered
monetary damage as a result of the crime due to his
property having been converted, stolen or unlawfully
obtained, or its value substantially decreased as a result of
the crime . . . the court shall order the defendant to make
restitution . . . Restitution shall be ordered in the full amount
of the damages . . . . (Emphasis added.)
The statute is silent with respect to interest. Consequently, the construction and
application of the statute are matters of law which are reviewed de novo. See Bob
-3-
Hook Chevrolet Isuzu, Inc. v. Commonwealth of Kentucky, Transportation Cabinet, Ky.,
983 S.W.2d 488 (1998).
KRS 446.080 provides that all statutes shall be liberally construed with a view to
promote their objects and carry out the intent of the legislature. It is the duty of the
Court to give effect to the intent of the legislature as contained in the statutory language,
considering the evil the law was intended to remedy. See Commonwealth v. Allen, Ky.,
980 S.W.2d 278 (1998).
The rule of lenity is qualified by the same statute. Commonwealth v. White, Ky.,
3 S.W.3d 353 (1999). Cf. Perrin v. United States, 444 U.S. 37, 100 S.Ct. 311, 62
L.Ed.2d 199 (1979) which provides that the rule of lenity applies when courts are
uncertain about the statute’s meaning and is not to be used in complete disregard of the
purpose of the legislature.
We recognize, as did the Court of Appeals, that at common law, criminal fines
and penalties were not subject to prejudgment interest. Rodqers v. United States, 332
U.S. 371, 68 S.Ct. 5, 92 L.Ed. 3 (1947). At common law, interest was not allowed on
judgments either. Powell v. Bd. of Ed. of Harrodsburg, Ky.App., 829 S.W.2d 940
(1991). The issue of prejudgment interest was not the subject of this appeal so we are
limiting our opinion to the matter of post-judgment interest only.
Here, KRS 533.030(3),
clearly states that restitution shall be ordered in the full
amount of damages. If restitution is to be considered full, it will need to include postjudgment interest in most cases. In this case, the amount of the restitution judgment
and the period allowed for its payment means that the Jefferson County Public
Education Foundation will suffer a substantial decrease in the value of its property and
loss of the use of the funds unless interest is permitted.
-4-
The argument that there is no express statutory authority for the imposition of
interest is without merit here. The courts of other states may ordain specific statutory
language is necessary to require interest, see State v. Akers, 435 N.W.2d 332 (Iowa
1989) but that is not the case in Kentucky. Many federal and state courts have ordered
interest on restitution without specific statutory language. As an example, we look to 18
U.S.C. $3664(f)(l)(a), which is similar to our statute in that it requires restitution of the
“full” amount of the damages. United States v. Pattv, 992 F.2d 1045 (10th Cir. 1993)
and United States v Smith, 944 F.2d 618 (9th Cir. 1991), upheld the payment of
prejudgment interest on restitution ordered by a trial court. See also Government of the
Virqin Islands v. Davis, 43 F.3d 41 (3d Cir. 1994) and United States v. Rochester, 898
F.2d 971 (5th Cir. 1990) which upheld both prejudgment and post-judgment interest on
restitution orders.
A number of state courts have also decided that interest can be properly included
in restitution even though the restitution statutes make no specific mention of interest.
People v. Law, 591 N.W.2d 20 (Mich. 1999), upheld the grant of interest on criminal
restitution. Dorris v. State, 656 P.2d 578 (Alaska Ct.App. 1982) held that interest on
restitution was proper “since the purpose of the restitution statute is to make the victim
whole.”
For other cases allowing interest as part of restitution see Ex parte Fletcher,
2001 Ala. Lexis 92; Valenzuela v. People, 893 P.2d 97 (Colo, 1995); People v. Acosta,
860 P.2d 1376 (Colo.Ct.App. 1993); Ebauoh v. State, 623 So.2d 844 (Fla. Dist. Ct. App.
1993); Woods v. State, 418 S.2d 401 (Fla. Dist. Ct. App. 1982); State v. Brewer, 989
P.2d 407 (Mont. 1999); State v. Mevers, 571 N.W.2d 847 (S.D. 1997); Rodriquez v.
State, 710 S.W.2d 167 (Tex.App. 1986).
-5-
Commonwealth v. Bailev, Ky., 721 S.W.2d 706 (1986), sets out the purpose of
restitution as follows:
We also do not feel this is additional punishment exacted by
the criminal justice system. It is neither imprisonment as
envisioned by KRS Chapter 532, nor fine as set out in KRS
Chapter 534. It is merely a system designed to restore
property or the value thereof to the victim. It is not
punishment to make the criminal give back something which
was never his and which was obtained by him only by
commission of a crime.
Money is property which is capable of being converted. & Commonwealth v.
Karnes, Ky., 849 S.W.2d 539 (1993). In order to give the statute full legislative intent,
this Court interprets the language of the statute to include interest as “monetary
damage” which, because it resulted from the theft and conversion of the property of the
victim, must be included in the full amount of damages provided by the restitution
statute.
We cannot accept the argument by the Hearns to the effect that the legislature
must have intended to exclude interest from other forms of restitution simply because it
expressly imposed interest on restitution in the medicaid fraud statute, KRS
205.8467(1)(a). In the case of medicaid fraud, the damages can only be pecuniary.
The forms of restitution contemplated by KRS 533.030 are not limited to money
damages. Under KRS 533.030(3), a probated defendant can be made to work at a
minimum wage and pursuant to subsection C, such a defendant can be made to return
any undamaged property. The specific language of the medicaid fraud statute arises
because only one type of restitution in that situation is available and it is money. The
language of KRS 533.030 is more general in order to cover a variety of restitution
situations, including monetary damages such as the cost of the loss of the use of money
-6-
over a period of time. The conversion here resulted in the loss of the use of money for
an indefinite period.
The claim by the Hearns that no other Kentucky statutes refer to interest on
restitution is misplaced because the statutes on which they rely are procedural in nature
and do not relate to the duty of the trial court to determine the amount of restitution to be
paid. KRS 532.160, the garnishment statute; KRS 532.162, which allows a lien on
earnings; and KRS 532.164, which permits a lien on real property, merely provide
mechanisms for enforcing collection and do not involve any determination of the amount
or type of restitution.
We find the other citations employed by the Hearns, namely, Powell v. Bd. of Ed.
of Harrodsburq, Ky.App. 829 S.W.2d
940 (1991); Clavborn v. Commonwealth, Ky.App.,
701 S.W.2d 413 (1985); and Commonwealth, Dept. of Transo., Bur. of Hiqhways v.
Lamb, Ky., 549 S.W.2d 504 (1976) distinguishable and not applicable to this situation.
The contention that the legislative intent underlying KRS 533.030 is only to
promote rehabilitation and deterrence is unconvincing. The statute clearly authorizes
restitution for the full amount of the damages. Such restitution is intended to fully
compensate for the loss incurred, serves to emphasize the seriousness of the crime and
to deter similar offenses in the future by not only these defendants, but other potential
criminals. The imposition of interest in the restitution award serves the legislative
purpose of deterrence and rehabilitation as well as making the victim whole. Including
interest on the amount taken in a financial crime clearly emphasizes the seriousness of
the crime and highlights the full criminal responsibility.
-7-
II. Judicial Economy/Fair Play
The argument by the Hearns that the imposition of interest on restitution awards
has a negative implication is without merit. In fact, the authority of the trial court to order
interest on restitution actually serves judicial economy and the traditional notions of fair
play and substantial justice. The inclusion of interest in restitution orders would neither
expand the current rights of victims to seek interest on restitution in a civil action nor
compromise such a right. The victims already have the right to seek interest if they
choose in a civil case. That right is not affected in any way by the decision of this Court.
However, by allowing interest on restitution, the interests of judicial economy and
substantial justice for victims would be enhanced because they would not have to spend
additional time and funds seeking an appropriate civil remedy.
The trial court has the statutory authority to establish restitution and is in the best
position to make the appropriate and well-informed decision in a fair and impartial
manner. Commonwealth v. Bailev, supra, held that a restitution payment schedule
could be determined at the time a defendant was released from custody. There is no
undue or inherently difficult burden on the trial court to require such full restitution.
The exact amount of principal upon which interest must be assessed and
included in a restitution payment schedule should be determined from the facts and
circumstances of a particular case. Interest must be assessed at the maximum legal
rate pursuant to KRS 360.010.
We find that the probation of which the Hearns are subject is governed by KRS
Chapter 533 and not by KRS 532.350 or KRS 532.356, both of which were enacted in
1998, and to some extent, amend the restitution system provided under KRS Chapter
-8-
532. Here, the crimes were all Class D felonies and because the sentences were
probated, KRS 533.030 requires restitution as a condition of such probation.
It is the decision of this Court that KRS 533.030(3), requires that the Hearns, as a
condition of their probation, pay full restitution to the Jefferson County Public Education
Foundation. The statute clearly states that the Court shall order the defendant to make
restitution and that such restitution shall be in the full amount of the damages. Thus,
the circuit court shall add post-judgment interest to the principal amount of the
restitution imposed.
The decision of the Court of Appeals is affirmed, and this matter is remanded to
the circuit court.
Lambert, C.J., Cooper, Graves and Keller, JJ., concur. Johnstone, J., dissents
by separate opinion and is joined by Stumbo, J.
-9-
COUNSEL FOR APPELLANT, PATRICIA HEARN:
J. Bat-t Adams
2000 Citizens Plaza
500 West Jefferson Street
Louisville, KY 40202
COUNSEL FOR APPELLANT, JAMES HEARN:
Steven R. Romines
Romines, Weis & Young
2000 Citizens Plaza
500 West Jefferson Street
Louisville, KY 40202
COUNSEL FOR APPELLEE:
A.B. Chandler, III
Attorney General
State Capitol Building
700 Capital Avenue
Frankfort, KY 40601
Jonathan A. Dyar
Commonwealth of Kentucky
Special Assistant Attorney General
514 W. Liberty Street
Louisville, KY 40202
Teresa Young
Assistant Commonwealth Attorney
514 W. Liberty Street
Louisville, KY 40202
Jeanne Deborah Anderson
Assistant Commonwealth Attorney
514 W. Liberty Street
Louisville, KY 40202
-1 o-
RENDERED: JUNE 13,2002
TO BE PUBLISHED
2000-SC-0865DG
PATRICIA HEARN AND
JAMES HEARN
V.
APPELLANTS
ON REVIEW FROM COURT OF APPEALS
99-CA-2638-MR
JEFFERSON CIRCUIT COURT NO. 98-CR-2403
COMMONWEALTH OF KENTUCKY
APPELLEE
DISSENTING OPINION BY JUSTICE JOHNSTONE
Hard cases make bad law. The majority would do well to heed these words of
the preeminent United States Supreme Court Justice Oliver Wendell Holmes, Jr. This
maxim is grounded firmly on the notion that result-oriented decision making driven by
particularly difficult facts can lead to unwise and unintended consequences.
The Hearns pled guilty to theft charges related to the conversion of hundreds of
thousands of dollars that were intended for the school children of Jefferson County. In
months of unparalleled media coverage, the public was repeatedly saturated with the
details of the Hearns’ devious criminal scheme. The citizens of Jefferson County were
repulsed by the Hearns’ breach of faith, and rightfully so.
Yet, the trial judge was confronted with the straightforward issue of whether the
trial courts of Kentucky are empowered to order interest to be paid on restitution that is
ordered in a criminal case. The trial court thoroughly weighed the issue and answered
the question in the negative. Today, the majority opinion ignores common law and
long-standing rules of statutory construction to answer that question in the affirmative.
The majority and the courts below all agree that the relevant statute, KRS 533.030(3),
is silent with respect to interest. Thus, resolution of this issue is reduced to the
application of basic principles of statutory construction.
The proper construction of the statute begins with the foundation laid by the
majority opinion. First, under the rule of lenity, courts are bound to construe criminal
statutes narrowly and give the accused the benefit of any ambiguities in the statute.
Next, under the common law, interest is not allowed on judgments and, further, criminal
fines and penalties are not subject to prejudgment interest. Add the Court of Appeals’
observations that legislative deviations from the common law require a clear statutory
mandate and that such statutes are construed narrowly, and the foundation becomes
rock solid - the conclusion inevitable. In fact, the Court of Appeals stated it correctly:
“Under these rules of construction . . . interest on the Hearns’ restitution obligation
would be improper unless the General Assembly had expressly provided for it.“’ But
somehow despite their fine beginnings, both the majority and the Court of Appeals only
manage to build a house of cards.
Through the looking glass, both the majority and the Court of Appeals leave their
solid bases to embark upon a tortuous journey of discovery contrived to arrive at a
legislative intent that mirrors their desired result. The Court of Appeals finds that our
‘Commonwealth v. Hearn, No. 1999-CA-002638-Ml?, slip op. at 5 (September 1,
2000).
-2-
“revised statute is a manifestation, among many others throughout the country, of the
‘victim’s rights movement,’ which has gained impetus during the past two or three
decades. This shift in purpose evinces a legislative intent . . . .‘I* The majority opinion
divines its legislative intent in the language of KRS 533.030(3), which states that
restitution shall be ordered in the full amount of the damages. Thus, it proclaims, “[i]f
restitution is to be considered fuli, it will need to include post-judgment interest in most
cases.‘13
Yet, it is clear that the legislature knows how to expressly provide for interest in
connection with a restitution order. It did just that in KRS 205.8467(1)(a) when the
General Assembly explicitly provided that medical service providers who are found
guilty of Medicaid fraud must pay interest in addition to the base amount of restitution.
Glaringly absent from KRS 533.030(3), or any of the other statutes cited by the
majority, is the provision for interest to be added to an order of restitution.
In deciding whether interest was authorized in addition to restitution in the
absence of statutory language with respect to interest, the Iowa Supreme Court stated
eloquently in State of Iowa v. Akers:4
Our ultimate goal in interpreting these sections is to determine
legislative intent, considering language used in the statute, the objects
sought to be accomplished, and the evils sought to be remedied. . . . We
think, for a number of reasons, that the legislative intent here was not to
permit the imposition of interest on restitution amounts.
*Commonwealth v. Hearn, No. 1999-CA-002638,
2000).
3Majority Opinion at 4.
4435 N.W.2d 332, 334 (Iowa 1989).
-3-
slip op at 7 (September 1,
First, as Akers points out, we have said that “legislative intent is
expressed by omission as well as by inclusion. The express mention of
certain conditions of entitlement implies the exclusion of others.” Barnes
v. Iowa Dep’t of Transp., 385 N.W.2d 260, 263 (Iowa 1986). We agree
with Akers that the inclusion of pecuniary damages, attorney’s fees, and
other costs in the statutory definition of “restitution” indicates a legislative
intent to exclude interest.
Interest is simply not one of the components of “restitution” under the
statutory definition: it is not pecuniary damages, court costs, attorney’s
fees, the expense of a public defender, or public service. See Iowa Code
5 910.1(4). As such, the sentencing court here should not have imposed
it. The courts of other states have taken a similar view. See People v.
Enoel, 746 P.2d 60, 62-63 (Colo. App. 1987) (imposition of interest on
restitution amount was not proper because interest was not “pecuniary
damages” under the restitution statute); State v. Dickenson, 68 Ore. App.
283, 285-87, 680 P.2d 1028, 1028-29 (1984) (order to pay interest on
restitution not proper because interest was not “special damages” under
restitution statute).
The same is true of our statutory definition of restitution in this Commonwealth.
The legislature enacted the following definition in KRS 532.350:
(l)(a) “Restitution” means any form of compensation paid by a convicted
person to a victim for counseling, medical expenses, lost wages due to
injury, or property damage and other expenses suffered by a victim
because of a criminal act.
Here again, the General Assembly could have, but did not, authorize interest in
connection with restitution orders.
Moreover, the Court of Appeals’ and majority opinions need look no further than
subsection (1) of KRS 533.030 to glean the legislative intent. It provides in pertinent
part:
The conditions of probation and conditional discharge shall be such as
the court, in its discretion, deems reasonably necessary to insure that the
defendant will lead a law-abidino life or assist him to do so. . . .
(Emphasis added).
-4-
Clearly, the intent of the legislature was to promote rehabilitation, provide
deterrence, and monitor the defendant. Yet, the majority stirs its tea leaves to reveal
an intent by the General Assembly to make a victim whole, or provide full restitution.
That interpretation ignores the clear and unambiguous language of the statute.
KRS 533.030 has been in effect in this Commonwealth for two decades.
The Commonwealth has cited no case which has interpreted this statute to be a vehicle
for assessing costs - not one. The Commonwealth never attempted before or after
the Hearn case to have interest assessed along with restitution ordered in a criminal
case - not once. The implication is obvious: the Commonwealth has never before
seen this statute as providing authority for adding interest to an order of restitution.
And, the implications of assessing interest along with court-ordered restitution
are troubling. The majority opinion makes it clear that such a power is purely
discretionary with the trial judge. Among the unanswered questions are:
When should the trial judge use this discretionary power?
What is the appropriate rate of interest to apply?
Will victims in cases already decided involving restitution be able to move for
retroactive application for interest?
Will some standard need to be provided in the future if interest awards become
divergent among the trial judges and jurisdictions in the Commonwealth?
Will the majority opinion’s post-judgment interest awards be extended to
prejudgment scenarios?
After agonizing long and hard over this issue, Circuit Judge Mershon stated in
his thirteen page order that “if this Court found existing Kentucky law to justify it, it
-5-
would order the Hearns to pay interest in a heartbeat. But the Legislature has not
enacted any such statute nor has the Court been cited to any Kentucky appellate
decision permitting the imposition of interest on restitution.“5
Apparently, Judge Mershon once heard that hard cases make bad law.
Stumbo, J., joins.
50rder, Jefferson Circuit Court No. 98CR2403,
-6-
pp. 11-12 (October 13, 1999).
Some case metadata and case summaries were written with the help of AI, which can produce inaccuracies. You should read the full case before relying on it for legal research purposes.
This site is protected by reCAPTCHA and the Google Privacy Policy and Terms of Service apply.