On February 13, 2024, Justice Ruchelsman of the Kings County Commercial Division issued a decision in Brighton Bldr. LLC. v. Bedford Landscape Contrs., LLC, 2024 NY Slip Op. 30475(U), holding that a conversion claim cannot be based on a contractual debt, explaining:
It is well settled. that to establish a claim -for conversion. the party must show the legal right to an identifiable item or items and that the other party has exercised unauthorized control and ownership over the items. As the Court of Appeals explained 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) plaintiff’s possessory right or interest in the property and (2) defendant’s dominion over the property or interference with it, in derogation of plaintiff’s rights. Therefore, where a defendant interfered with plaintiff’s right to possess the property a conversion has occurred.
However, merely alleging a debt that is owed does not establish a cause of action for conversion. As the court noted in Traffix Inc., v. Herold, 269 F. Supp. 2d 263 [S.D.N.Y; 2003] a conversion action cannot be predicated on an equitable interest or a mere breach of contractual obligation. Indeed, the entire conversion claim is premised upon the allegation there is an unpaid balance due the plaintiff. However, conversion is only applicable where there is an identifiable fund and an obligation to return or otherwise treat in a particular manner the specific fund in question. In this case there is merely an outstanding debt owed to the plaintiff. That does not establish the claim of conversion. Consequently, the motion seeking to dismiss this claim is granted.
(Internal quotations and citations omitted).