Applied Medical Corp. v. Thomas

To state a conversion claim, a plaintiff need only allege ownership or the right to possession of the converted property, not both ownership and right to possession.  he trial court erred in granting defendant summary judgment on plaintiff’s claim that defendant committed conversion by refusing to cash plaintiff’s check for the repurchase price of its shares in defendant’s possession and his refusal to turn over the shares and execute a stock assignment form, as required by a stock repurchase plan.  Plaintiff suffered damage in paying for expert appraisers, auditors and attorneys in connection with its efforts to get defendant to turn over the stock.  Contrary to Rutherford Holdings, LLC v. Plaza Del Rey (2014) 223 Cal.App.4th 221, this decision holds that to state a conversion claim, a plaintiff need only allege ownership or the right to possession of the converted property, not both ownership and right to possession.  Here, the stock purchase plan gave plaintiff the right to possession.  Even if the corporation could cancel defendant’s shares without his consent, his conduct constituted conversion because it cast doubt and created a dispute as to ownership of the shares, interfering with plaintiff’s free and unhampered right to the shares.  The trial court properly granted defendant summary judgment on plaintiff’s fraud based claims which were filed more than three years after the alleged fraud.  An e-mail from plaintiff’s general counsel showed that plaintiff understood more than three years before it pleaded the fraud claims that defendant had entered into an agreement with others to share his stock in plaintiff, allegedly contrary to his agreement with and fiduciary duty to plaintiff as its director.  Thus, plaintiff could not rely on delayed discovery to toll the limitations period.  Also, the fraud claims did not relate back to earlier complaints in the case that alleged breach of a stock purchase agreement and conversion.  The earlier complaints related to events in 2012 while the alleged fraud occurred as early as 2002.

California Court of Appeal, First District, Division 5 (Simons, J.; Jones, P.J., concurring & dissenting); April 12, 2017; 2017 WL 1350761

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