May 23, 2022

Volume XII, Number 143

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May 23, 2022

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Demand Is Necessary for Claim of Conversion

Where a business had properly come into possession of certain personal property, no claim for conversion could exist unless a demand for the property’s return was refused.  Morris International, Inc. v. Packer, 2021 NCBC 66A (J. Davis).   Because Plaintiff failed to present any evidence that it had demanded Defendants return certain property that Plaintiff had previously sent, summary judgment on Plaintiff’s conversion claim was appropriate.

Plaintiff entered into an agreement with defendant Old Beam General Partnership (“OBGP”) and PA & K, LLC (“PA&K”) [through the president of one of OBGP’s partners, defendant, Anthony Packer (“Packer”)] to form a joint venture (“JV”).  The JV’s purpose was to develop property owned by OBGP into a luxury RV park. The RV park would be contained within a subdivision that adjoined a golf course.  Plaintiff contributed significant money, skills, and expertise to the JV, including site plans and various budgets necessary to develop the RV park.  Plaintiff sent the plans and budgets to Packer at various times throughout the life of the JV. When residents of the subdivision threatened to sue over the establishment of the RV park, Plaintiff and Packer agreed that the RV park was not worth pursuing. Packer advised Plaintiff that OBGP would pursue other opportunities using the land, including possibly selling it or developing it with someone else.  Plaintiff admittedly voiced no objection to abandoning the park and never demanded the return of any specific set of plans or budgets.  Roughly one year later, Packer and another individual formed defendant KPP and developed the RV park.  After discovering KPP’s activities, Plaintiff demanded to be included in the new venture, but Defendants refused.  Plaintiff filed suit asserting, inter alia, a claim for conversion related to the plans and the budgets.  Defendants moved for summary judgment, contending that Plaintiff could not maintain a conversion claim because it had never demanded the return of any specific property.

The Business Court agreed. Noting that Plaintiff admitted to sending the plans and budgets for the RV park to Packer during the life of the JV, the Business Court recognized that Defendants (through Packer) were lawfully in possession of the plans and budgets.  Where a party lawfully possesses certain personal property, the Business Court explained, Plaintiff was obligated to make a demand for the return of specific property before a conversion claim could be maintained for that property.  (Opinion, ¶78) (emphasis in original). A mere general description of the purportedly converted property is not sufficient.  (Id., ¶79).  Because Plaintiff never made a demand of any specific property, the Business Court determined summary judgment on the conversion claim was appropriate.

Based upon this decision, a business that has previously provided documents or other property to another (i.e., a now-former employee, business partner, etc.) should make a written demand for the return of the items, being as specific as possible when describing the property in the demand letter.

Additional legal points:

  • The mere filing of an improper lis pendens is not, in and of itself, sufficient to prove the filer induced a third party not to perform a contract for purposes of a claim for tortious interference with a contract.  (Opinion, ¶96).

 

Copyright © 2022 Womble Bond Dickinson (US) LLP All Rights Reserved.National Law Review, Volume XII, Number 5
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About this Author

Phil Mohr Bankruptcy and Litigation Attorney Womble Bond Dickinson
Partner

Phil is a trial lawyer. Although he will search for creative legal and business solutions for his clients, his more than two decades of trial experience for both publicly traded and privately held companies in state and federal courts throughout the country have taught him that some cases simply have to be tried to verdict. Representing companies that have both been wronged and accused of wrongdoing, Phil has honed his trial skills in cases involving complex business litigation (including fraudulent transfer and equitable subordination cases in federal bankruptcy court)...

336.721.3577
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