                                                                          F I L E D
                                                                   United States Court of Appeals
                                                                           Tenth Circuit
                      UNITED STATES CO URT O F APPEALS
                                                                       September 22, 2006
                                 TENTH CIRCUIT                         Elisabeth A. Shumaker
                            __________________________                     Clerk of Court

 U N ITED STA TES O F A M ER ICA,

          Plaintiff - Appellee,

 v.                                                       No. 05-5184
                                                       (N.D. Oklahoma)
 W A L TER ED WA R D KO STIC H,                    (D.Ct. No. 05-CR-13-TCK)

          Defendant - Appellant.
                         ____________________________

                              OR D ER AND JUDGM ENT *


Before H E N RY, BR ISC OE, and O’BRIEN, Circuit Judges.




      After examining the briefs and appellate record, this panel has determined

unanimously that oral argument would not materially assist the determination of

this appeal. See Fed. R. App. P. 34(a)(2); 10th Cir. R. 34.1(G). The case is

therefore ordered submitted without oral argument.

      W alter Edward Kostich, Jr., was charged with four criminal counts arising

out of a house fire set by an incendiary device on January 12, 2005. At the time

of the fire, four individuals, including a fourteen month-old child, were in bed or

      *
          This order and judgment is not binding precedent except under the doctrines of
law of the case, res judicata and collateral estoppel. The court generally disfavors the
citation of orders and judgments; nevertheless, an order and judgment may be cited under
the terms and conditions of 10th Cir. R. 36.3.
asleep in the house. On June 27, 2005, Kostich pled guilty to the unlawful

possession of a destructive device in violation of 26 U.S.C. § 5861(d) (Count 2).

A jury trial was held on the remaining counts; he was found guilty of the unlawful

manufacture of an unregistered destructive device in violation of 26 U.S.C. §

5861(f) (Count 1). 1 On September 30, 2005, Kostich was sentenced to 63 months

imprisonment on both counts to run concurrently and was ordered to pay

$154,030.36 in restitution. Kostich filed a timely notice of appeal challenging the

calculation of his offense level under the guidelines, the district court’s grant of a

two level upward departure, and the calculation of the amount of restitution. W e

exercise jurisdiction under 18 U.S.C. § 3742(a) and 28 U.S.C. § 1291 and

AFFIRM .

Background:

      A Presentence Investigation Report (PSR ) was prepared in advance of

Kostich’s sentencing and recommended a base offense level of 18 for a violation

of § 5861(d), (f). 2 See USSG §2K2.1(a)(5). The base offense level was increased

by two levels under USSG §2K2.1(b)(3)(B) because the offense involved a



      1
         He was acquitted of Counts 3 and 4: malicious damage and destruction, by
means of fire and an explosive, of real property used in activity affecting interstate
commerce (Count 4) in violation of 18 U.S.C. § 844(i) and use of fire and an explosive to
commit a felony, to wit, malicious damage and destruction of real property (Count 3) in
violation of 18 U.S.C. § 844(h)(1), respectively.
      2
         The 2004 edition of the United States Sentencing Guidelines Manual was used in
this case.

                                           -2-
destructive device. The base offense level was increased an additional four levels

under USSG §2K2.1(b)(5) because the destructive device was used in connection

with another felony offense, arson. Thus, the PSR recommended an adjusted

offense level of 24. Based on a Criminal History Category of I, the PSR

calculated the guideline range as 51 to 63 months imprisonment. The PSR also

noted the district court had the option of imposing restitution as a condition of

supervised release and recommended $154,030.36 based on the home owner’s

insurance company’s submission of an affidavit as to the outstanding amount of

loss. Kostich objected to the four level increase under §2K2.1(b)(5), the failure

to include a two level reduction for acceptance of responsibility, and to the

calculation of restitution. The district court agreed a two level reduction for

acceptance of responsibility was warranted, but overruled Kostich’s other

objections.

      The government moved for an upward departure under, inter alia,

Application Note 8 to USSG §2K2.1, which provides for an upward departure

when the offense level does not “adequately capture the seriousness of the offense

because of the type of destructive device involved, the risk to the public welfare,

or the risk of death or serious bodily injury that the destructive device created.”

Over Kostich’s opposition, the district court granted the government’s motion,

finding a two level upward departure was appropriate. The resulting offense level

was 24, leading to a guideline range of 51 to 63 months imprisonment. After

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considering the factors set forth in 18 U.S.C. § 3553(a) to ensure a reasonable

sentence, the district court sentenced Kostich to 63 months imprisonment and

directed him to pay $154,030.36 in restitution.

Discussion:

      Kostich again challenges the four level enhancement under USSG

§2K2.1(b)(5), the district court’s grant of a two level upward departure under

Application Note 8 to §2K2.1, and the calculation of the amount of restitution.

Kostich does not challenge the reasonableness of the sentence under United States

v. Booker, 543 U.S. 220 (2005). W e consider each of his arguments in turn.

I. Four Level Enhancement

      W e review legal questions involving a district court’s application of an

enhancement under the guidelines de novo and factual findings for clear error.

United States v. M ozee, 405 F.3d 1082, 1088 (10th Cir.), cert. denied, 126 S.Ct.

253 (2005).

      Section 2K2.1(b)(5) provides that “[i]f the defendant used or possessed any

firearm or ammunition in connection with another felony offense,” his offense

level is to be increased by four levels. Application Note 1 gives the term

“firearm,” the same “meaning given that term in 18 U.S.C. § 921(a)(3).” 18

U.S.C. § 921(a)(3) includes “any destructive device” within its definition of a

firearm. “Destructive device” includes any incendiary device. 18 U.S.C.

§ 921(a)(4)(i). The term “felony offense” in §2K 2.1(b)(5), “means any offense

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(federal, state, or local) punishable by imprisonment for a term exceeding one

year, whether or not a criminal charge was brought, or conviction obtained.”

USSG §2K2.1, comment. (n.4). Under O klahoma law , if convicted, Kostich’s

conduct w ould constitute first-degree arson. O KLA . S TAT . tit. 21, § 1401. As

Application Note 4 makes clear, the defendant need not be convicted of the

underlying offense. USSG §2K2.1, comment. (n.4).

      Kostich does not challenge the classification of arson as a felony for

purposes of §2K2.1(b)(5), nor does he argue the government failed to establish

his conduct met the elements of arson. Rather, Kostich relies on Application

Note 15, which provides that if the “[]other felony offense” in §2K2.1(b)(5) is an

“explosives or firearms possession or trafficking offense[],” it does not apply. H e

claims that because the arson in this case was comm itted by an incendiary device,

it is an “explosives or firearms” offense and thus cannot be used to enhance his

sentence under §2K2.1(b)(5). Kostich further asserts that because the same

destructive device was used in his counts of conviction and the arson offense,

they are “in parity” and §2K2.1(b)(5) does not apply.

      W e rejected similar arguments in United States v. Eaton, 260 F.3d 1232

(10th Cir. 2001). There, the court enhanced Eaton’s sentence under §2K2.1(b)(5)

because he had transferred three pipe bombs to an individual knowing they would

be used to feloniously destroy a car and/or to comm it murder. Eaton argued “the

comm ission of a felony offense such as arson or murder is coincidental to the

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bombs and not separate from their intended use and the enhancement is therefore

not warranted.” Id. at 1238. W e rejected the argument:

      If this court accepts Eaton’s argum ent, a sentence enhancement under
      §2K2.1(b)(5) would never be permissible in connection with a
      conviction for any crime involving a destructive device. This is not the
      rule. The mere fact that a destructive device has the potential to
      facilitate a felony does not exempt the application of § 2K2.1(b)(5).

Id.

       Similarly, Application Note 15 does not preclude use of arson as “another

felony offense” because it is not an “explosives or firearms possession or

trafficking offense[].” This is true even though it happened to be committed

using an explosive device. Nor is it relevant that Kostich was not charged with

arson or that the same destructive device was used to commit the arson offense

and the offenses of conviction. Like in Eaton, we see no error in applying the

four level enhancement in this case.

II. Upward D eparture

      After Booker, “[w]hen reviewing a district court’s application of the

Sentencing Guidelines, we review legal questions de novo and we review any

factual findings for clear error, giving due deference to the district court’s

application of the guidelines to the facts.” United States v. M artinez, 418 F.3d

1130, 1133 (10th Cir.) (quotation omitted), cert. denied, 126 S.Ct. 841 (2005).

W hen review ing upward departures, we employ a four-part test:

      (1) w hether the factual circumstances supporting a departure are

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      permissible departure factors; (2) whether the departure factors relied
      upon by the district court remove the defendant from the applicable
      Guideline heartland thus warranting a departure; (3) whether the record
      sufficiently supports the factual basis underlying the departure; and (4)
      whether the degree of departure is reasonable.

United States v. Wolfe, 435 F.3d 1289, 1295 (10th Cir. 2006) (quotation omitted).

All of these steps are subject to an abuse of discretion standard. Id. The degree

of an upward departure is “reasonable” if the district court “precisely lay[s] out

its reasoning and analysis as to why it is selecting a particular degree of

departure” sufficient to “give us reasonable indicia that the sentence the district

court pronounces is proportional to the crime committed.” United States v.

Proffit, 304 F.3d 1001, 1012 (10th Cir. 2002) (quotation omitted). Ordinarily,

“[t]he district court accomplishes this task by using any reasonable methodology

hitched to the Sentencing Guidelines to justify the reasonableness of the

departure.” Id. (quotation omitted).

      Application Note 8 to §2K2.1 allows an upward departure where the

defendant’s offense level “does not adequately capture the seriousness of the

offense because of the type of destructive device involved, the risk to the public

welfare, or the risk of death or serious bodily injury that the destructive device

created.” Application Note 8 also cross-references USSG §5K2.2 which

authorizes an upward departure “[i]f significant physical injury resulted” from the

defendant’s conduct. In such a case, “[t]he extent of the increase ordinarily

should depend on the extent of the injury, the degree to which it may prove

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permanent, and the extent to which the injury was intended or knowingly risked.”

Id.

       Relying on Application Note 8, the district court agreed to a departure

based on “the risk of death or serious bodily injury to the [homeowner and his

family] and to other families living on either side of the house had the fire spread

to neighboring homes,” as well as the fact the homeow ner suffered smoke-

inhalation as a consequence of the fire started by Kostich. (R. Vol. VI. at 40.) It

settled on two levels because “[m]ost analogous guidelines provide a two-level

increase for this subject.” (Id.) The district court noted the departure “could be

more, there’s no question,” but based on the offenses charged and Kostich’s lack

of a criminal history decided to impose only two levels. (Id.)

       K ostich challenges the propriety of granting an upward departure at all. H e

argues the unadjusted guideline range w as “adequate” and that “the only injury

noted at sentencing and testified to at trial was minor smoke inhalation [suffered

by the homeow ner, which] certainly [was] not life threatening or serious.”

(Appellant’s Br. at 18.) Kostich also notes that no other members of the

household received medical treatment. Thus, he argues, property damage was the

main issue at sentencing and the application of Note 8 was “unnecessary, and is

not justified for the small increase in the sentence imposed by the district court.”

(Id. at 19.)

       W e disagree. Enhancement of a defendant’s offense level may be

                                          -8-
warranted either where his conduct causes physical injury or poses the risk of

causing injury. See USSG §2K2.1, comment. (n.8); §5K2.2. Here it is

undisputed the owner of the home suffered smoke inhalation and had to receive

medical treatment. As the district court correctly noted, “[h]is injury meets the

guideline definition for bodily injury set forth in [the] sentencing guideline[s].”

(R. Vol. VI at 40.); see USSG §1B1.1, comment. (n.1(B)). Even if such an injury

did not warrant a two-level upward departure by itself, Application Note 8 of

§2K2.1 allow s upw ard departures where the defendant’s conduct poses the “risk

of death or serious bodily injury.” Despite his evident lack of concern for the

health of the individuals reposed in the home to which he set fire, Kostich

concedes “his conduct was reckless and could [have] caused personal harm and

injury.” (Appellant’s Br. at 18.) Kostich notes that “[l]uckily, no one was

seriously hurt.” (Id.) He is correct — it was fortunate for the victims and

fortunate for himself. In any event, Kostich’s conduct clearly falls within the

meaning of the applicable guideline provisions. Kostich provides no convincing

reasons the district court’s imposition of a two level enhancement was an abuse of

discretion.

III. Restitution

       “In evaluating the district court’s award of victim restitution, we review its

factual findings for clear error.” United States v. Kravchuk, 335 F.3d 1147, 1156

(10th Cir. 2003). “W e review its calculation and ultimate award of restitution for

                                          -9-
abuse of discretion . . . .” Id.

       The substance of Kostich’s objection to the amount of restitution is that the

amount was impermissibly speculative because the calculation was premised on

an undocumented business run out of the victim’s home. This argument ignores

the factual record considered by the district court below . Contrary to K ostich’s

assertion that the amount of loss was undocumented, the district court expressly

relied upon an affidavit submitted by the victim’s homeowner insurance company,

Farm Bureau, as to the amount of loss. Additionally, as the district court

specifically addressed below, the victim’s Farm Bureau policy covered only

personal property, not business related loses. The district court stated:

       I don’t think any of [the business losses are] being reimbursed. It was
       the destruction of the house, the personal property in the house, and the
       living expenses . . . – there’s nothing here other than w hat Farm Bureau
       has filed an affidavit on. There’s nothing about business expenses or
       business losses or any of that. And if that’s not included -- if you have
       information that’s included, why, I w ant to hear it, but otherwise you’re
       arguing about something that’s not part of this restitution.

(R. Vol. VI. at 31-32.) Kostich could not provide the district court a basis for his

objection, nor can he on appeal. Unsubstantiated concerns that a restitution order

is overinclusive is insufficient to overturn a district court’s restitution order.

Given the record, the district court did not abuse its discretion in awarding

$154,030.36 in restitution.




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A FFIRME D.



              Entered by the C ourt:

              Terrence L. O ’Brien
              United States Circuit Judge




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