Conversion

Conversion is the unauthorized assumption and exercise of the right of ownership over property belonging to another to the exclusion of the owner's rights. To withstand a motion to dismiss, the complaint must allege facts showing that (1) the property subject to conversion is a specific, identifiable thing, (2) plaintiff had ownership, possession, or control over the property before its conversion, and (3) defendant exercised unauthorized dominion over the thing, to the alteration of its condition or to the exclusion of plaintiff's rights.

Thus, a claim of conversion will be governed by the technical rules of ownership. For example, if the plaintiff wires his money into the defendant's account, and the defendant absconds with it, that's not conversion. That's because, under banking law, once the money enters the defendant's account, it becomes the defendant's money. Thus, the defendant can do what he wants with it without committing the tort of conversion.

Under the law of conversion, a lien on property is an interest in the property. Thus, exercising control over property encumbered by a lien may constitute a conversion of the lien holder's property. For example, if a lender has a security interest in collateral, moving the collateral may constitute a conversion of the collateral.

The exercise of dominion may consist of a detention of the property, a taking of it, or disposal of the property. So take, for example, a garage, which has a lien on the cars to enforce payment of the garage's bill. An improper refusal to release a car would constitute conversion.

Similarly, consider a situation where plaintiff purchases securities from a seller. After the purchase date, the issuer of the securities pays a dividend to the seller, by mistake. The seller's failure to pay the dividend over to the seller constitutes an act of conversion.

Significantly, the plaintiff need not show that the defendant understood that the property belonged to plaintiff. All that's needed is a showing that the defendant intended to exercise dominion over the property. In other words, good faith on the part of the defendant is no defense.

So let's say that a printer believes that a publisher owes the printer money, and acting on that belief, refuses to release the publisher's magazines. If it then turns out that, due to billing errors, the publisher doesn't owe the money, the printer can be liable for conversion.

Conversion is one of the few causes of action for which the victim can recover for pain and mental suffering. To recover for such injuries, the plaintiff must show that the conversion was malicious. And for purposes of showing malice, it isn't necessary to show ill will, because an improper motive may satisfy the malice requirement.

So, for instance, if the defendant exercises dominion over the plaintiff's property to coerce the payment of a debt not owed, that motive would satisfy the malice requirement. And needless to say, a claim for pain and mental suffering will dramatically increase the amount in dispute, giving the plaintiff strong leverage on the situation.

A plaintiff can recover lost profits if such loss is a foreseeable consequence of the conversion. Say, for example, a physician hires a billing service to collect payment from the patients. If the billing service withholds its records, the physician can recover the amount he would have recovered from the patients.

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