Many business litigation cases assert claims for conversion and civil theft. Under Florida law, and as explained by Florida’s Third District Court of Appeal in Ice v. Cosmopolitan Residences on South Beach, a Condominium Association, Inc., 237 So.3d 408 (Fla. 3d DCA 2017), conversion “is the exercise of wrongful dominion and control over the property to the detriment of the actual owner.” In many cases, plaintiffs overplay their hands and assert conversion over matters that Florida law does not allow. For example, it is well-established law in Florida that a simple debt which can be discharged by the payment of money cannot generally serve as the basis for a claim for conversion or civil theft. Fla. Desk, Inc. v. Mitchell Int’l, Inc., 817 So.2d 1059 (Fla. 5th DCA 2002). As another example, claims asserting conversion of money are limited in certain respects. For money to be the subject of the conversion claim, “there must be an obligation to keep intact or deliver the specific money in question, so that money can be identified.” Futch v. Head, 511 So.2d 314 (Fla. 1st DCA 1987). In other words, “an action for conversion of money can only be maintained where the money at issue has been kept separate.” Rupp v. Schon, 608 So.2d 934 (Fla. 4th DCA 1992). Peter Mavrick is a Fort Lauderdale business litigation attorney, and represents clients in business litigation in Miami, Boca Raton, and Palm Beach. The Mavrick Law Firm represents businesses and their owners in breach of contract litigation and related claims of fraud, non-compete agreement litigation, trade secret litigation, trademark infringement litigation, employment law, and other legal disputes in federal and state courts and in arbitration.
Although a contractual relationship between the parties will not bar a claim for conversion or civil theft, the conversion or civil theft “must go beyond, and be independent from, a failure to comply with the terms of a contract.” Gasparini v. Pordomingo, 972 So.29 1073 (Fla. 3d DCA 2008). This is because of the long-standing principle in Florida law that “a plaintiff may not circumvent the contractual relationship by bringing an action in tort.” Ginsburg v. Lennar Fla. Holdings, Inc., 645 So.2d 490 (Fla. 3d DCA 1994). For example, in Burke v. Napieracz, 674 So.2d 756 (Fla. 1st DCA 1996), Florida’s First District Court of Appeal held that the economic loss rule did not preclude a cause of action for a tort that was distinct or independent from a breach of contract. In Burke, the defendant was to receive specifically identifiable social security funds, deposit those funds in an identifiable bank account, and forward the funds to plaintiff. The defendant was not authorized to withdraw monies from the account except as specifically authorized by Burke. The breach of the agreement would have resulted from the defendant’s failure either to properly deposit the social security funds or to provide the funds to Burke as requested. A tort was committed because, not only did the defendant fail to perform his contractual obligations, he took the funds for his personal use. The Burke decision held that an “affirmative and intentional act of converting the funds to his own use by allegedly stealing the monies to which he was entrusted” gave rise to a tort separate and independent from the breach of contract.
Claims for civil theft go well beyond what is required to establish conversion. Florida’s Fourth District Court of Appeal, in Heldenmuth v. Groll, 128 So.3d 895 (Fla. 4th DCA 1991), explained that “[t]o establish a claim for civil theft, a party must prove that a conversion has taken place and that the accused party acted with criminal intent.” The criminal intent must be proven by “clear and convincing evidence,” which is a higher standard of proof than the “preponderance of the evidence” typically required in business litigation. In Heldenmuth, the purchaser of real property appropriately stated a claim for civil theft against escrow agents by alleging that the escrow agents used some of the escrow funds for the escrow agents’ own use.
Peter Mavrick is a Fort Lauderdale business litigation lawyer, and represents clients in Miami, Boca Raton, and Palm Beach. This article does not serve as a substitute for legal advice tailored to a particular situation.