Conversion cause of action fails because alleged converted funds cannot be specifically identified

Opinion and Order granting motion to dismiss conversion cause of action


The plaintiff sold his membership interest in defendant LLC per a Redemption Agreement which provided that the LLC would not pay remaining members more than a certain amount if payments to the plaintiff were in arrears. The amended complaint alleged that while the obligor was in arrears, payments to remainning members exceeded the agreed amount, and that the LLC was rendered insolvent. In addition to breach of contract claims, the plaintiff claimed conversion of funds. Defendants moved to dismiss the conversion cause of action, and the court granted the motion. Conversion does not lie where the funds alleged to have been converted cannot be specifically identified, and where the plaintiff cannot show that he had possession or title to the funds allegedly converted. Money may be the subject of a conversion claim, but only if it can be specifically identified and segregated. Additionally, the plaintiff must show legal ownership of the specific funds, or an immediate superior right of possession and control of an identifiable fund. Conversion does not lie where the damages are sought for a breach of contract.

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Reference Info:Decision | State, 2nd Circuit, New York | United States

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