On July 15, 2022, Justice Masley of the New York County Commercial Division issued a decision in Lotte Hotel N.Y. Palace, LLC v. Anthony J. Diguiseppe, P.C., 2022 NY Slip Op. 32328(U), holding a corporate office liable for a company’s conversion of 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. A claim for the conversion of money requires a specific, identifiable fund with an obligation to return or treat that fund in a particular manner. A conversion cannot be based on a breach of contract. A corporate officer is liable if they are personally responsible for the conversion of a third-party’s property if committed within the scope of employment. One in lawful possession of another’s property can be charged with conversion if there is a refusal to return the property after a demand is made by the rightful owner.
Plaintiff’s motion for summary judgment for conversion against the PC is denied because it stems from the failure to maintain a separate procurement fund account, thus this claim is duplicative. However, DiGuiseppe’s conduct extends far beyond the breach of contract claim. There is no factual dispute that plaintiff demanded the procurement funds be returned by defendants and that defendants refused. The documentary evidence submitted by both parties shows that DiGuiseppe never separated the procurement funds into a sole account and lost control of the funds altogether. The fact that plaintiff’s procurement funds were transferred to unverifiable and unrelated individuals, who are account holders of an account at Bank of Africa, which is now frozen by bank regulators in South Africa, is independent of the breach of contract claim. DiGuiseppe, PC’s CEO and President, is personally responsible for the conversion of plaintiff’s funds. He exercised dominion and control over plaintiff’s procurement funds and has refused to return them.
(Internal quotations and citations omitted) (emphasis added).