Conversion Claims in Construction Transactions: What Every Contractor Needs to Know

In certain situations, monetary or contractual disputes pass the edge of a simple misunderstanding or defective performance, and constitute a clear taking of someone’s funds. In scenarios like this, where intent is a clear component of the monetary loss, a person may have a common law claim for “conversion.”

A conversion occurs when “a person asserts a right of dominion over [property] which is inconsistent with the right of the owner and deprives the owner of the right of possession.” Ming v. Interamerican Car Rental, Inc., 913 So. 2d 650, 654 (Fla. 5th DCA 2005); see also Edwards v. Landsman, 51 So. 3d 1208, 1213 (Fla. 4th DCA 2011) (“To state a cause of action for conversion, one must (1) allege facts sufficient to show ownership of the subject property and (2) facts that the other party wrongfully asserted dominion over that property”).

To properly allege conversion, a litigant must describe the taking of “specific identifiable funds.” However, courts have found sufficient allegations of identifiable funds where the plaintiff delivered money to be used for a specific, express purpose. See Eagle v. Benefield-Chappell, Inc., 476 So. 2d 716, 718 (Fla. 4th DCA 1985) (holding that deposits paid for the sole purpose of ordering furniture for a construction project were “sufficiently capable of identification because they were delivered to be used for a specific purpose”).

In a case we recently handled, our client for instance, pleaded that “approximately $190,000.00” of their funds to defendants for the purpose of “fund[ing] the labor and materials required to complete glass and glazing work on [a construction] project.” Therefore, we argued that the funds, designated for a specific purpose, constitute identifiable funds. We further alleged that “

[w]

hile in possession of these funds [Defendants] converted the funds to [their] own use and spent the funds on other projects entirely unrelated to [our client]’s project”.

The taking of money in the context of a construction project can be the basis for a claim of conversion. See Bergen Brunswig Corp. v. State, 415 So. 2d 765, 767 (Fla. 1st DCA 1982) (“The wrongful use of [funds provided for a specific purpose], contrary to [plaintiff’s] express instruction constitutes conversion”); All Cargo Transport, Inc. v. Florida E.C.R. Co., 355 So. 2d 178, 179 (Fla. 3d DCA 1978) (“It constitutes conversion for a creditor to apply [designated funds] in a way which is expressly contrary to the debtor’s specific instructions”).

For more information about business or real estate disputes, contact an experienced attorney in Miami at 305-570-2208.

You can also contact our team directly at: arianna@ayalalawpa.com

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[The opinions in this blog are not intended to be legal advice. You should consult with an attorney about the particulars of your case].