Post Authored by Alexander I. Passo
Conceptually, conversion claims seem relatively basic. Your client’s property is taken by another party, and your client can’t retrieve it. However, there are a few nuances for such a claim that are overlooked when analyzing a potential conversion claim or drafting the complaint.
1. All the elements must be pled.
Under Illinois law, a plaintiff must establish that: (1) they have a personal right to a specific piece of property; (2) they have an absolute and unconditional right to immediate possession of the personal property; (3) they made a demand for possession of the property currently possessed by the defendant; and (4) the defendant wrongfully assumed control of the plaintiff’s property. Fonda v. Gen. Cas. Co. of Ill., 279 Ill. App. 3d 894,899 (1st Dist. 1996). When drafting the complaint, you should explicitly state what types of property your client owned, when it was taken by the defendant, and when your client made a demand for its return. Because Illinois is a fact-pleading state, merely stating that the defendant took your client’s property without their consent is insufficient. Further, you should make a demand for the return of the property before filing suit. While the Illinois Supreme Court has not established that the filing of a lawsuit does not constitute a demand, the Seventh Circuit has ruled that it does not satisfy the demand element. Stevens v. Interactive Fin. Advisors, Inc., 800 F.3d 735, 741-742 (7th Cir. 2016).
2. Initial lawful possession may nevertheless turn into a claim.
A party who previously had permission to possess the property may still have a claim brought against them. This occurs when the party in possession of the property exceeds the property owner’s prior consent for the use. See Peco Pallet, Inc. v. Northwest Pallet Supply Co., 2016 WL 5405107, No. 1:15-cv-06811 (N.D. Ill. Sept. 28, 2016); see also Jensen v. Chi. & W. Ind. R. Co., 94 Ill. App. 3d 915, 932 (1st Dist. 1981) (“The essence of conversion is not acquisition by the wrongdoer but a wrongful deprivation thereof.”) For example, if Acme provides Wayne Industries widgets to store on its behalf, and Wayne Industries then refuses to return them, there would be a claim of conversion. Courts do not look at whether there is an unlawful acquisition; instead, conversion focuses on the wrongful deprivation of the property.
3. Real property is not subject to a conversion claim.
You can’t bring a claim against an individual or entity for converting a home or other real property. See In re Estate of Yanni, 2015 IL App (2d) 150108 *22 (2d Dist. 2015). Instead, Illinois courts have held that only tangible personal property that is being unlawfully withheld forms a basis for a conversion claim.
The party who owns the property is the proper plaintiff. One common mistake occurs when an entity’s interest holder brings a direct claim for conversion of their entity’s property instead of the entity, the proper party.
5. Claims on converted funds are tricky.
To bring a claim on converted monetary funds, the claimant must be able to specifically identify, describe, or be able to segregate them in a specific manner. In other words, you must be able to allege where the funds were converted and the sum which the plaintiff was deprived. See Roderick Dev. Inv. Co., Inc. v. Community Bank of Edgewater, 282 Ill. App. 3d 1052, 1058-59 (1st Dist. 1996) (Money must be in a specified identifiable fund and of a specific amount.)
The measure of damages for a conversion claim is the market value of the property at the time and place of the conversion plus legal interest. Dubey v. P. Storage, Inc., 395 Ill. App. 3d 342, 361-62 (1st Dist. 2009). It is the plaintiff’s burden to show evidence of the property’s reasonable value. If the converted property has no market value, a conversion claim may still be brought successfully if the actual value of the property, according to the plaintiff, can be found in another rational manner. Long v. Arthur Rubloff & Co., 27 Ill. App. 3d 1013, 1025-26 (1st Dist. 1975).
7. Punitive damages.
Punitive damages may be recovered if you successfully obtain a verdict on a conversion claim. It is essential to plead in your prayer for relief that you are seeking such damages. Otherwise, they will be deemed waived, even if you divulge that you’re seeking these damages on the eve of trial and the judge and/or jury awards them to you.
About the Author:
Alex is a commercial trial attorney with the law fimr of Latimer LeVay Fyock with lead counsel experience on a broad array of disputes, including closely-held shareholder/member disputes, breaches of contract, fraud, TROs and injunctions, and professional negligence actions. Alex also serves as outside general counsel for several startup and mid-market companies, assisting them their legal needs when they arise.