Conversion Claim Seeking Damages Arising From Contractual Breach Dismissed

On October 13, 2020, Justice Sherwood of the New York County Commercial Division issued a decision in Dragons 516 Ltd. v. GDC 138 E 50 LLC, 2020 NY Slip Op. 33403(U), dismissing a conversion claim seeking damages arising from a breach of contract, explaining:

As to the eighth claim, for conversion, the tort of conversion is established when one who owns and has a right to possession of personal property proves that the property is in the unauthorized possession of another who has acted to exclude the rights of the owner. The elements of conversion are (I) plaintiffs possessory right or interest in certain property and (2) defendant's dominion over the property or interference with it in derogation of plaintiffs rights. A plaintiff need only allege and prove that the defendant interfered with plaintiff's right to possess the property. The defendant does not have to have taken the property or benefitted from it. However, a conversion claim may not be maintained where damages are merely sought for a breach of contract. As the damages sought pursuant to this claim are the same damages sought in the breach of contract claims, this claim fails as a matter of law.

(Internal citations omitted).

Complex business litigation often involves conversion claims. Conversion can involve much more than physical objects. It can involve money (in certain circumstances) as well as intangible property. As this decision shows, there are limits to the law of conversion. Contact Schlam Stone & Dolan partner John Lundin at jlundin@schlamstone.com if you or a client have a question regarding one person depriving another of her property, whether that property is tangible or intangible, or even involves a discrete fund of money.