State of Minnesota, Respondent,

This opinion will be unpublished and
may not be cited except as provided by
Minn. Stat. § 480A.08, subd. 3 (2018).

STATE OF MINNESOTA
IN COURT OF APPEALS
A19-1755

State of Minnesota,
Respondent,

vs.

Stephen Charles Iepson,
Appellant.

Filed May 26, 2020
Reversed and remanded
Worke, Judge

Dakota County District Court
File No. 19HA-CR-18-948

Keith Ellison, Attorney General, St. Paul, Minnesota; and

James C. Backstrom, Dakota County Attorney, Anna Light, Assistant County Attorney,
Hastings, Minnesota (for respondent)

Hillary B. Parsons, Caplan & Tamburino Law Firm, P.A., Minneapolis, Minnesota (for
appellant)

Considered and decided by Worke, Presiding Judge; Hooten, Judge; and Jesson,
Judge.

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U N P U B L I S H E D O P I N I O N
WORKE, Judge
Appellant argues that the district court abused its discretion by ordering restitution.
Because a portion of the restitution award was not for loss caused by appellant’s underlying
conduct, we reverse and remand for the district court to vacate that portion of the award.
FACTS
On February 13, 2018, police received a report that appellant Stephen Charles
Iepson had a marijuana-grow operation in the basement of his mother’s home. Officers
responded to the home and confirmed the existence of the operation. Iepson was charged
with fifth-degree controlled-substance crime—sale and fifth-degree controlled-substance
crime—possession.
On January 10, 2019, Iepson pleaded guilty to fifth-degree controlled-substance
crime—possession and received a stay of adjudication, probation for up to three years, and
a fine. The sale count was dismissed. The sentencing order indicated that restitution was
reserved.
On February 22, 2019, a representative for Iepson’s mother submitted an affidavit
for restitution in the amount of $88,421.43 to remodel the basement. Probation agent Brian
Pfieffer reduced his recommended restitution amount to $5,777. Iepson challenged
restitution, and the district court held a hearing.
Pfieffer testified that $5,777 constituted the loss connected to the underlying
criminal conduct. Pfieffer testified that the electrical work had been altered to
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accommodate ten grow lights and two reflective heated blankets. Pfieffer used an estimate
of loss prepared by Michael Kanaskie, an electrical estimator.
Kanaskie testified that he inspected the basement and the estimate was based on
getting “things up to code,” or restoring “the operability of the electrical in the basement
in a safe manner.” Kanaskie testified that he noticed “numerous illegal wires into the
[electrical] panel,” which he referred to as “double tapped.” Kanaskie testified that the
wires were double tapped for the purpose of the grow lights. Kanaskie testified that he also
observed “illegal wiring and . . . big streetlight ballasts that were bolted to wooden beams”
in the room that housed the grow operation. He also noted “numerous disconnected outlets
with hanging wires” in the room. Kanaskie testified that the hanging wires were safe and
repair was unnecessary unless the area was used as a living space. Because repair was
optional, Kanaskie did not include the cost in his estimate, but stated that repair would cost
approximately $1,000 to $1,500.
On cross-examination, Kanaskie stated that he did not focus solely on the grow-
operation room, and agreed that his estimate included getting “other areas . . . up to code.”
Kanaskie testified that it would cost $3,094 to replace the main or “original house panel,”
which was not up to code and “illegal.”
Iepson testified that his brother had been living in the basement and did the
alterations to establish the grow operation. Iepson testified that his brother asked him to
feed his cats and water his marijuana plants after his brother became ill and was in
transitional care. Iepson testified that he watered the plants until his brother died on
February 2, 2018.
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The district court relied on Kanaskie’s estimate and testimony in concluding that
the economic loss as a re sult of the offense was $7,270—the amount of the estimate and
$1,500 for the optional work. This appeal followed.
D E C I S I O N
Authority to order restitution
Iepson first argues that the district court did not have authority to order restitution,
because a crime victim is entitled to restitution if the offender is convicted, and here, Iepson
was not convicted because he received a stay of adjudication.
Iepson did not raise this challenge in district court. Generally, this court will not
consider issues not raised before the district court. See Roby v. State, 547 N.W.2d 354, 357
(Minn. 1996). But this court may choose to address issues raised for the first time on appeal
when the interests of justice so require. State v. Benniefield, 678 N.W.2d 42, 45 (Minn.
2004).
Iepson urges this court to consider his claim in the interests of justice because the
claim “is plainly decisive of the entire controversy on its merits” and “there is no possible
advantage or disadvantage to either party in not having had a prior ruling.” See Watson v.
United Servs. Auto. Ass’n, 566 N.W.2d 683, 688 (Minn. 1997). Iepson argues that this
court should consider his claim, relying on In re Welfare of I.N.A., 902 N.W.2d 635 (Minn.
App. 2017), review denied (Minn. Nov. 28, 2017).
In I.N.A., a juvenile was ordered to pay restitution. 902 N.W.2d at 639. The juvenile
appealed, arguing that the district court did not have authority to order restitution when the
district court did not make a finding of delinquency. Id. The juvenile did not raise the
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issue in district court. Id. This court, relying on Watson, addressed the merits of the claim,
stating that the issue satisfied the exception to the rule because it was decisive of the
controversy, neither party was advantaged or disadvantaged, both parties fully briefed the
issue, and there was no factual dispute. Id. at 639-40.
The state argues, however, that it would be disadvantaged if we consider the issue
because the plea agreement “was made with the understanding that restitution would be a
condition of probation.” The guilty plea petition does not provide anything regarding
restitution and the record does not contain a transcript from the plea hearing. And while
the sentencing order indicates that restitution was reserved, this does not establish that
restitution was negotiated as part of the plea agreement. As such, a factual dispute exists
as to whether restitution was a material term in the plea agreement, and the exception does
not apply.
Additionally, even without the existence of the factual dispute, Iepson was aware
that restitution was reserved, he challenged restitution, and he had a restitution hearing;
thus, he had several opportunities to raise his challenge to the district court’s authority to
order restitution. See State v. Anderson, 507 N.W.2d 245, 247 (Minn. App. 1993) (stating
that record suggested that appellant should have been aware tha t victim might seek
restitution, thus, his failure to object earlier constituted a waiver to his challenge on appeal),
review denied (Minn. Dec. 22, 1993). Accordingly, we decline to address Iepson’s claim.
Loss caused by criminal conduct
Iepson argues that the district court abused its discretion by ordering restitution
because he did not cause the loss and the award is too inclusive. A district court has broad
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discretion to order restitution. State v. Andersen, 871 N.W.2d 910, 913 (Minn. 2015). But
a district court “may order restitution only for losses that are directly caused by, or follow
naturally as a consequence of, the defendant’s crime.” State v. Boettcher, 931 N.W.2d 376,
381 (Minn. 2019); see State v. Palubicki, 727 N.W.2d 662, 666 (Minn. 2007) (“The
primary purpose of [restitution] is to restore crime victims to the same financial position
they were in before the crime.”).
Iepson claims that the district court failed to indicate how he caused any of the
damage because he testified that it was his brother’s operation. But Iepson testified that he
took care of the operation in his brother’s absence, and he pleaded guilty to controlled-
substance possession; thus, even though Iepson believes that only his brother was
criminally responsible for the operation, Iepson was involved and his underlying criminal
conduct directly caused the loss.
However, there is merit to Iepson’s challenge to the amount of the award. Pfieffer
testified that the electricity in the basement had been altered for the grow lights and heat
blankets. He reiterated on cross-examination that all of the electrical issues in the basement
were not connected to t he grow operation; only the grow lights and blankets were
connected to the operation.
Kanaskie testified about wires that were double tapped for the operation and “illegal
wiring and ballasts” in the room where the marijuana was grown. Kanaskie also testified
about “numerous disconnected outlets with hanging wires” in the room that held the
operation. But Kanaskie’s estimate included $3,094 to replace the “original” main service
panel to bring it up to code. There was no evidence that the outdated panel was directly
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connected to the underlying criminal conduct. Thus, correcting the wires is a cost
associated with the loss for the underlying criminal conduct, but the cost of replacing the
original electrical panel is not.
We conclude that the district court abused its discretion by determining that Iepson
was responsible for $7,270 in restitution because the replacement of the outdated panel is
not a loss connected to the underl ying criminal conduct. Accordingly, we reverse and
remand for the district court to modify the restitution award by vacating the $3,094 that it
would cost to replace the panel.
Reversed and remanded.