On April 16, 2024, Justice Bannon of the New York County Commercial Division issued a decision in Atlas Tech. Group LLC v. Soluna MC LLC, 2024 NY Slip Op. 31448(U), holding that a conversion claim cannot be based on a payment owed under a contract, explaining:
To state a cause of action for conversion, a tort, the complaint must plead the plaintiff’s possessory right or interest in the property and defendant’s dominion over the property or interference with it in derogation of plaintiff’s rights. An action for conversion of money may be made out where there is a specific, identifiable fund and an obligation to return or otherwise treat in a particular manner the specific fund in question. As damages, the plaintiff seeks the return of approximately $464,000 it alleges is being wrongfully withheld by the defendants. However, the sum is the estimated balance of fees the plaintiff had prepaid over time and on an ongoing basis to the defendants under the parties’ contract and the plaintiff does not establish an obligation to return that particular amount as damages. Moreover, where, as here, damages are merely being sought for breach of contract, an action for conversion is duplicative and cannot be validly maintained. A simple breach of contract is not to be considered a tort unless a legal duty independent of the contract itself has been violated.
(Internal quotations and citations omitted).