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Current Developments in the Commercial Divisions of the
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Posted: August 12, 2017

Plaintiff Awarded Damages on Conversion Claim Even Though Converted Funds Returned

On July 21, 2017, Justice Kornreich of the New York County Commercial Division issued a decision in Cargill Soluciones Empresariales, S.A. De C.V., SOFOM, E.N.R. v. Desarrolladora Farallon S. de R.L. de C.V., 2017 NY Slip Op. 31650(U), awarding judgment and damages on a conversion claim even though the defendant returned the converted funds, explaining:

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. Two key elements of conversion are (1) plaintiffs possessory right or interest in the property and (2) defendant’s dominion over the property or interference with it, in derogation of plaintiffs rights. Where the property is money, it must be specifically identifiable and be subject to an obligation to be returned or to be otherwise treated in a particular manner. The funds of a specific, named bank account are sufficiently identifiable.

There is no question of fact that Rivera converted the $15 million for approximately 18months. Farallon has admitted that Diaz Rivera directed approximately US$15 million of Resort revenues to the Banorte Account in 2013 and 2014, a practice that was finally ended when Cargill SOFOM obtained the Cash Management Order in the SNDA Action on July 8, 2014, directing Capella to give Cargill SOFOM control over the Resort’s cash and finances. This is a textbook example of conversion. While SOFOM does not seek summary judgment on damages, the court rejects defendants’ argument that the conversion claim should be dismissed for lack of damages. While the $15 million was eventually returned, SOFOM lost the right to use that money for approximately 18 months. That money could have been placed in an interest-bearing account, and certainly could have been used for other business purposes. Regardless, even if no actual damages were suffered, damages are not an element of a conversion claim. On the contrary, once a conversion of money is established, the plaintiff is entitled to statutory pre-judgment interest. Summary judgment on liability, therefore, is granted to SOFOM on its conversion claim against Farallon and Rivera. At a minimum, SOFOM will be awarded pre-judgment interest on the converted amount for the approximately 18 months it was in the Banorte Account.

(Internal quotations and citations omitted).

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