You are here: / Conversion
, ,

CONVERSION, REPLEVIN AND UNJUST ENRICHMENT CAUSES OF ACTION TIME-BARRED, CRITERIA EXPLAINED.

Plaintiff executor sued defendant, Delaine, under conversion, replevin and unjust enrichment theories for artwork which decedent, Arthur, was allegedly entitled to but which decedent never picked up from the warehouse where it was stored. The First Department determined the conversion, replevin and unjust enrichment causes of action were time-barred:

 

Under CPLR 214(3), the statutory period of limitations for conversion and replevin claims is three years from the date of accrual. The date of accrual depends on whether the current possessor is a good faith purchaser or bad faith possessor. An action against a good faith purchaser accrues once the true owner makes a demand and is refused … . This is “because a good-faith purchaser of stolen property commits no wrong, as a matter of substantive law, until he has first been advised of the plaintiff’s claim to possession and given an opportunity to return the chattel” … . By contrast, an action against a bad faith possessor begins to run immediately from the time of wrongful possession, and does not require a demand and refusal … . Thus, “[w]here replevin is sought against the party who converted the property, the action accrues on the date of conversion” … .

Here, plaintiff alleges that Delaine is a wrongful possessor of the Artwork by virtue of her retention thereof in defiance of this Court’s 1993 order. Accordingly, since Delaine was holding the Artwork in bad faith, the demand and return rule does not apply and the three-year limitations period commenced as of the date of the wrongful taking, which occurred when Delaine retained the Artwork after the issuance of our March 18, 1993 order. Thus, plaintiff’s conversion and replevin claims, filed in 2012, are untimely … . * * *

Unjust enrichment occurs when a defendant enjoys a benefit bestowed by the plaintiff without adequately compensating the plaintiff … . The statute of limitations for unjust enrichment generally accrues upon “the occurrence of the alleged wrongful act giving rise to restitution” … . Here, any alleged “enrichment” took place when Delaine retained possession of the Artworks following our 1993 decision. Accordingly, plaintiff’s unjust enrichment claim is also time-barred.  Swain v Brown, 2016 NY Slip Op 00574, 1st Dept 1-28-16

 

CRIMINAL LAW (COURT PROPERLY REFUSED TO DISQUALIFY A JUROR WHO STATED SHE COULD NOT DELIBERATE FURTHER BECAUSE SHE WAS EMOTIONALLY OVERWHELMED)/JURIES (COURT PROPERLY REFUSED TO DISQUALIFY A JUROR WHO STATED SHE COULD NOT DELIBERATE FURTHER BECAUSE SHE WAS EMOTIONALLY OVERWHELMED)/DISQUALIFICATION OF JUROR (COURT PROPERLY REFUSED TO DISQUALIFY A JUROR WHO STATED SHE COULD NOT DELIBERATE FURTHER BECAUSE SHE WAS EMOTIONALLY OVERWHELMED)

,

LONG-ARM JURISDICTION DID NOT REACH AN AUDITING FIRM IN THE UK AND CONVERSION CAUSES OF ACTION FAILED BECAUSE THE CONVERTED FUNDS WERE NOT IDENTIFIABLE AFTER THEY HAD BEEN INVESTED.

In affirming Supreme Court’s dismissal of several complaints stemming from the defendants’ alleged involvement with investments managed by Bernard Madoff, the First Department determined New York jurisdiction did not extend to a firm in the UK (KPMG UK) which allegedly negligently audited Madoff Securities, and further determined conversion causes of action failed because the funds allegedly converted were not sufficiently identifiable after they had been invested:

 

The motion court correctly found that New York lacks personal jurisdiction over KPMG UK pursuant to CPLR 302(a)(3)(ii). While plaintiffs allege that KPMG UK committed a tort outside the state (negligently auditing nonparty Madoff Securities International, Ltd. [MSIL] in the United Kingdom), and their causes of action arise out of that tort, KPMG UK’s act did not cause injury to a person or property within the state. “[T]he situs of commercial injury is where the original critical events associated with the action or dispute took place, not where any financial loss or damages occurred”… .  * * *

Where, as here, a plaintiff alleges that a defendant converted money, the money “must be specifically identifiable and be subject to an obligation to be returned or to be otherwise treated in a particular manner” … . [Plaintiff] sent her money to Beacon Associates, which sent it to Madoff, who deposited it at JPMorgan. Even if, arguendo, [plaintiff’s] money was specifically identifiable when she sent it to Beacon Associates, there is no indication that Beacon Associates segregated it when it sent investors’ money to Madoff. By the time Madoff deposited investors’ money at JPMorgan, [plaintiff’s] investments would not have been specifically identifiable. McBride v KPMG Intl., 2016 NY Slip Op 00306, 1st Dept 1-19-16

 

CIVIL PROCEDURE (NEW YORK JURISDICTION DID NOT REACH UK FIRM ALLEGED TO HAVE NEGLIGENTLY AUDITED MADOFF SECURITIES)/CONVERSION (ALLEGEDLY CONVERTED FUNDS MUST BE IDENTIFIABLE, FUNDS NO LONGER IDENTIFIABLE AFTER INVESTMENT)

Allegation of Interference With Possession of Manufactured Home Stated Cause of Action for Conversion

The Fourth Department determined plaintiff had stated a cause of action for conversion.  Plaintiff alleged he had purchased a manufactured home and defendants prevented him from removing the home from defendant’s park:

“A conversion takes place when someone, intentionally and without authority, assumes or exercises control over personal property belonging to someone else, interfering with that person’s right of possession” … . We conclude that the complaint alleged sufficient facts to state a cause of action for conversion … . The complaint alleged that plaintiff was the owner of the manufactured home and that defendants interfered with plaintiff’s possession of that property by preventing plaintiff from removing the home from defendants’ park. The court dismissed that cause of action on the ground that there was no showing that defendants took ownership of the unit or obtained any benefit from the unit remaining on the property. We conclude, however, that plaintiff’s allegation that defendants interfered with plaintiff’s right to possess the property is sufficient to state a cause of action for conversion …, which, contrary to the court’s analysis, does not require an allegation, much less a showing, that defendants took ownership of the property or benefitted therefrom. Hillcrest Homes LLC v Albion Mobile Homes Inc, 2014 NY Slip Op 03065, 4th Dept 5-2-14

 

, ,

Elements of Conversion, Moneys Had and Received and Breach of Fiduciary Duty Causes of Action Described/Equitable Estoppel Did Not Apply to Toll Applicable Statutes of Limitations

The Third Department explained the elements of causes of action for conversion, aiding and abetting conversion, moneys had and received, breach of fiduciary duty, and aiding and abetting breach of a fiduciary duty.  The Third Department further held that the doctrine equitable estoppel did not toll the applicable statutes of limitations and delineates what the applicable statutes of limitations are.  With respect to conversion, moneys had and received and equitable estoppel, the court wrote:

“Conversion is an unauthorized exercise of dominion and control over” someone else’s property that “interferes with and is in defiance of the superior possessory right of the owner or another person” … . A claim can exist for aiding and abetting conversion if the aider-abettor has actual knowledge that the person who directly converted the plaintiff’s property did not own that property … . Here, the complaint alleges that defendant knew of and acquiesced in Jaques’ unauthorized personal purchases from plaintiff’s accounts, that the purchased items were delivered to and used to improve defendants’ home, and that defendant accepted the benefits of these converted items. These allegations stated a cause of action against defendant for aiding and abetting conversion. * * *

Plaintiff properly stated a cause of action against defendant for moneys had and received. The elements of such a cause of action are that the defendant received money belonging to the plaintiff and benefitted from that money, and that equity and good conscience will not permit the defendant to keep the money … . The complaint alleges that money stolen from plaintiff by Jaques was used to improve and maintain defendants’ home, and that defendant consented to these actions. Accepting the allegations as true, and reasonably inferring that the use of this money provided a benefit to defendant, the third cause of action was sufficient. * * *

Supreme Court erred in concluding that the doctrine of equitable estoppel tolled the statutes of limitations as raised by defendant. Although the doctrine precludes a defendant from relying on a “statute of limitations defense when the plaintiff was prevented from commencing a timely action by reasonable reliance on the defendant’s fraud, misrepresentation or other affirmative misconduct . . ., equitable estoppel does not apply where the misrepresentation or act of concealment underlying the estoppel claim is the same act which forms the basis of [the] plaintiff’s underlying substantive cause[s] of action” … . Torrance Constr., Inc. v Jaques, 2015 NY Slip Op 02813, 3rd Dept 4-2-15

 

, , ,

Seizure of Claimant’s Computers Pursuant to a Warrant Did Not Give Rise to Conversion, Negligent Misrepresentation and Constitutional Tort Causes of Action—Elements of Those Causes of Action Explained

The Fourth Department reversed the Court of Claims and dismissed causes of action for conversion and negligent misrepresentation stemming from the seizure of claimant’s computers pursuant to a judicial warrant.  The court noted that the seizure pursuant to the authority of the warrant precluded the conversion cause of action and the absence of privity between the claimant and the investigators who said the computers would be promptly returned precluded the negligent representation cause of action. Alternate ways to seek return of the computers (an application to County Court and an Article 78 proceeding if the application were denied) precluded the constitutional tort cause of action:

An actionable “conversion takes place when someone, intentionally and without authority, assumes or exercises control over personal property belonging to someone else, interfering with that person’s right of possession” … . Here, a search warrant specifically authorized law enforcement to “search for and seize” six categories of items, including “[a]ll computers and computer storage media and related peripherals, electronic or computer data.” Claimants have never challenged the validity of the search warrant. Moreover, the unchallenged warrant placed no time limit on the retention of the items seized, and the authorization to “seize” the computers was not terminated until County Court ordered the property returned following Boerman’s guilty plea. We therefore conclude that defendant’s exercise of control over the computers did not constitute conversion inasmuch as it had the proper authority to exercise such control … .

The tort of “negligent misrepresentation requires [a claimant] to demonstrate (1) the existence of a special or privity-like relationship imposing a duty on the defendant to impart correct information to the plaintiff; (2) that the information was incorrect; and (3) reasonable reliance on the information’ ” … . We agree with defendant that, as a matter of law, there can be no “privity-like relationship” between an investigator and the target of his or her investigation … . Indeed, the relationship between investigator and target is the opposite of a “special position of confidence and trust” in which one party might justifiably rely upon the ” unique or specialized expertise’ ” of the other party … . Thus, as defendant correctly contends, the negligent misrepresentation claim fails as a matter of law … .

Even assuming, arguendo, that the initial seizure or continued detention of claimants’ computers violated the Search and Seizure Clause of the State Constitution (art I, § 12), we conclude that “no . . . claim [for constitutional tort] will lie where the claimant has an adequate remedy in an alternate forum” … . Here, claimants could have raised their constitutional arguments in an application to County Court seeking the return of their computers … or, if such motion were denied, in a CPLR article 78 proceeding seeking relief in the nature of mandamus or prohibition … . LM Bis Assoc Inc v State of New York, 2015 NY Slip Op 00007, 4th Dept 1-2-15

 

, , ,

Complaint Did Not State Causes of Action for Replevin or Conversion Because the Specific Funds Involved Were Not Sufficiently Identified/Fraud Cause of Action Stated—Inference of Fraud Sufficiently Raised from Circumstances Alleged

The Fourth Department determined the complaint did not state causes of action for replevin and conversion, but did state a cause of action for fraud.  The motions to dismiss the replevin and conversion causes of action pursuant to CPLR 3211(a)(7) should therefore have been granted.  The basis of the complaint was the allegation that defendants embezzled as much as $4 million from an incapacitated person (Aida Corey):

Addressing first the replevin cause of action, we note that replevin is a remedy employed to recover a specific, identifiable item of personal property …, and “[o]rdinary currency, as a rule, is not subject to replevin” … . Unless the currency can be specifically identified, i.e., it consists of specific, identifiable bills or coins, replevin does not lie … . Here, the amended complaint alleges that the individual defendants “have used some or all of Aida Corey’s $4 million in cas[h] to purchase real and personal property and other tangible assets” and that they “have taken approximately $4 million of Aida Corey’s cash and/or personal property.” The sole focus of the parties, both in Supreme Court and on appeal, however, has been on the money allegedly taken by the … defendants, and we therefore deem abandoned any allegations by plaintiffs concerning personal property … . We thus conclude that the amended complaint fails to state a cause of action for replevin, because there is no “specifically identified” money that plaintiffs seek to recover … .

With respect to the plaintiff guardians’ cause of action for conversion, the amended complaint likewise alleges that the individual defendants “have taken approximately $4 million of Aida Corey’s cash and/or personal property,” but as with the replevin cause of action we conclude that plaintiffs have abandoned any allegations concerning personal property … . Money may be the subject of a cause of action for conversion only if “it can be identified and segregated as a chattel can be” …, i.e., “where there is a specific, identifiable fund” … . Contrary to the contentions of plaintiff guardians, the sums allegedly converted here do not constitute the type of specific, identifiable fund that would support a conversion cause of action … .

…[T]he court properly refused to dismiss the fraud cause of action against them. A fraud cause of action must allege that the defendant: (1) made a representation to a material fact; (2) the representation was false; (3) the defendant intended to deceive the plaintiff; (4) the plaintiff believed and justifiably relied on the statement and in accordance with the statement engaged in a certain course of conduct; and (5) as a result of the reliance, the plaintiff sustained damages … . The allegations in the complaint must set forth the “basic facts constituting the fraud” …, to “inform a defendant of the complained-of incidents” … . The Court of Appeals has “cautioned that [CPLR] 3016 (b) should not be so strictly interpreted as to prevent an otherwise valid cause of action in situations where it may be impossible to state in detail the circumstances constituting the fraud” (Pludeman v Northern Leasing Sys., Inc., 10 NY3d 486, 491 [internal quotation marks omitted]). Here, much of the detail surrounding the alleged fraud is ” peculiarly within the knowledge’ ” of the … defendants …, and we agree with plaintiffs that an inference of fraud arises from the circumstances alleged in the amended complaint … . Heckl v Walsh, 2014 NY Slip Op 07787, 4th Dept 11-14-14

 

Electronic Documents Constitute “Tangible Personal Property” and Can Therefore Be the Subject of a Conversion Cause of Action

The Second Department determined Supreme Court properly denied a motion for summary judgment dismissing the conversion cause of action, finding that electronic documents constitute “identifiable tangible personal property” and therefor can be the subject of a conversion action:

The subject matter of a conversion cause of action ” must constitute identifiable tangible personal property’; real property and interests in business opportunities will not suffice” … . However, electronic documents stored on a computer may be the subject of a conversion claim just as printed versions of the documents may … . On their cross motion, the defendants failed to demonstrate that the client accounts alleged to have been converted did not exist in tangible form, such as computerized or paper client lists. Accordingly, that branch of the cross motion which was for summary judgment dismissing the conversion cause of action was properly denied, regardless of the sufficiency of the plaintiff’s opposing papers … . Volodarsky v Moonlight Ambulette Serv Inc, 2014 NY Slip Op 07498, 2nd Dept 11-5-14

 

,

Criteria for Judicial Estoppel Not Met/Conversion Action Cannot Be Based Upon a Right To Payment

The Second Department determined that, although the criteria judicial estoppel had not been met and Supreme Court should not have dismissed the conversion cause of action on that ground, the court properly dismissed the conversion cause of action. The court explained that the mere right to payment cannot be the basis of conversion:

“Under the doctrine of judicial estoppel or inconsistent positions, a party who assumes a certain position in a prior legal proceeding and secures a favorable judgment therein is precluded from assuming a contrary position in another action simply because his or her interests have changed” … . “The doctrine rests upon the principle that a litigant should not be permitted . . . to lead a court to find a fact one way and then contend in another judicial proceeding that the same fact should be found otherwise'” … .

Here, the Supreme Court erred in, in effect, applying the doctrine of judicial estoppel as a ground for directing the dismissal of the second cause of action, which alleged conversion. The plaintiff’s allegations in a prior action entitled Barker v Hussain, commenced in the Supreme Court, Nassau County, under Index No. 6382/11, were neither sufficiently definite nor so clearly inconsistent with her current position in this action so as to warrant the application of the doctrine of judicial estoppel against her … . * * *

A cause of action alleging conversion should be dismissed when the plaintiff does not allege “legal ownership or an immediate right of possession to specifically identifiable funds and that the defendant exercised an unauthorized dominion over such funds to the exclusion of the plaintiff’s rights” … . “Moreover, the mere right to payment cannot be the basis for a cause of action alleging conversion since the essence of a conversion cause of action is the unauthorized dominion over the thing in question'” … . In other words, “[t]angible personal property or specific money must be involved” … . Barker v Amorini, 2014 NY Slip Op 06931, 2nd Dept 10-15-14

 

,

Conversion Cause of Action Cannot Be Based Solely Upon Allegations of Breach of Contract

In a detailed decision construing contract language, the Fourth Department noted that the conversion cause of action should be dismissed because no tortious conduct over and above the failure to fulfill the contract was alleged:

“[I]t is well established that a cause of action to recover damages for conversion cannot be predicated on a mere breach of contract” … .  Because plaintiff “failed to show . . . that [defendant] engaged in tortious conduct separate and apart from [its alleged] failure to fulfill its contractual obligations,” the cause of action for conversion must be dismissed… . Lehr, Inc v T-Mobile USA Inc…, 1085, 4th Dept 12-27-13

 

, ,

Conversion Action Can Not Be Based Upon Funds Which Came Into Party’s Possession Lawfully (Down Payment)

In a breach of (purchase) contract action, the Second Department explained that a conversion cause of action could not be based upon the down payment in seller’s possession, and an unjust enrichment cause of action could not be based on the same facts as the breach of contract cause of action:

The Supreme Court properly granted that branch of Smith’s motion which was for summary judgment dismissing the cause of action alleging conversion, since he was rightfully in possession of the down payment …. “Where one is rightfully in possession of property, one’s continued custody of the property and refusal to deliver it on demand of the owner until the owner proves his [or her] right to it does not constitute a conversion”…. The Supreme Court also properly granted that branch of the motion which was for summary judgment dismissing the cause of action alleging unjust enrichment as duplicative of the breach of contract cause of action….  Green Complex, Inc v Smith, 2013 NY Slip Op 04575, 2nd Dept, 6-19-13

 

Categories

Sign Up for the Mailing List to Be Notified When the Site Is Updated.

  • This field is for validation purposes and should be left unchanged.

Copyright © 2025 New York Appellate Digest, Inc.
Site by CurlyHost | Privacy Policy