When someone takes or refuses to return personal property, they could be prosecuted for criminal theft. But is there anything the victim can do in civil court?
Yes, the victim may have “conversion” or “civil theft” claims to bring in a civil lawsuit, which could result in a money judgment against the defendant. These claims routinely proceed in civil court without any criminal prosecution. However, the civil claims can proceed even if there is a criminal prosecution.
This article looks at conversion and civil theft claims, and how these claims are impacted by a criminal prosecution.
What is “Conversion” and “Civil Theft”?
Conversion and civil theft are legal claims that can be brought in a civil lawsuit. These claims are generally brought against a person that takes or refuses to return personal property.
Conversion is a common-law “tort” claim. Civil theft is a statutory claim under Minn. Stat. § 604.14. The same set of facts could lead to both a conversion claim and a civil theft claim. They are often brought in the same case. While conversion claims can lead to a money judgment for the value of the property, a civil theft claim carries “punitive damages” that can double the value of the claim.
If the value of the property is less than $15,000, the plaintiff can generally file a claim in conciliation court. Otherwise, the plaintiff can proceed in district court.
These claims frequently come up in the absence of a contract. If the disputed property relates to a contract, then a breach-of-contract claim would be the proper legal theory. Conversion and civil theft generally arise where there is no legal relationship between the parties. We see these claims in business disputes, lending disputes, and probate or trust disputes.
These claims might not apply when:
- the other person had a valid claim to ownership;
- the other person has a lien in the item, and statutes allow person to hold it until paid; or
- the other person accidentally holds the property, or holds it until the plaintiff can provide valid proof of ownership.
Conversion is a tort that occurs when a person “willfully interferes with the personal property of another without lawful justification, depriving the lawful possessor of use and possession.” Williamson v. Prasciunas, 661 N.W.2d 645, 649 (Minn. Ct. App. 2003).
The elements of common law conversion are: “(1) plaintiff holds a property interest; and (2) defendant deprives plaintiff of that interest.” Id.
A finding of conversion is limited to “those serious, major, and important interferences with the right to control the [personal property].” Bates v. Armstrong, 603 N.W.2d 679, 682 (Minn. Ct. App. 2000), review denied (Minn. Mar. 14, 2000).
Control Over Property
The defendant must exercise a certain level of control over the item(s). Minnesota courts have said:
To constitute conversion, one must exercise dominion over property that is inconsistent with the owner's right to the property, or some act must be done that destroys or changes the character of the property or deprives the owner of possession permanently or for an indefinite length of time.
McKinley v. Flaherty, 390 N.W.2d 30, 32 (Minn. Ct. App. 1986).
For instance, “[w]rongfully refusing to deliver property on demand by the owner constitutes conversion.” Id.
Conversion requires that the defendant have intent to commit an act that results in dispossession of the property, and that “his act be one which he knows to be destructive of any outstanding possessory right, if such there be.” Christensen v. Milbank Ins. Co., 658 N.W.2d 580, 586 (Minn. 2003) (quoting Restatement (Second) of Torts § 222 cmt. c (1965)).
Conversion is Fact-Dependent
Conversion cases depend a lot on the factual situation.
The clearest situations are where the plaintiff is the clear owner of the property and the defendant refuses to give it back. The plaintiff must simply have an ownership right that is superior to the defendant. A creditor with a senior lien in property over another creditor could have a conversion claim, among other claims.
The harder cases are when the plaintiff's ownership interest is unclear. For instance, perhaps the plaintiff gave the property to the defendant but was not clear if the defendant was to temporarily hold it or permanently keep it. Most personal property is not “titled” like a car, boat, or manufactured home. Therefore, there may not be paperwork or a contract to confirm the plaintiff's ownership interest or intent. In those circumstances, the plaintiff will have to properly develop evidence to support the conversion claim.
Type of Property
Generally, conversion claims relate to tangible, personal property.
While conversion could also include intangible assets (i.e., intellectual property), courts have generally limited the claim to personal property. For intangible property, there may be other claims and remedies available to the plaintiff (i.e., infringement of patents, trademarks, or trade secrets).
When another person takes trees or timber from property, there is a special rule that makes it a “trespass” rather than a conversion. Minn. Stat. § 548.05 states:
Whoever shall carry away, use or destroy any wood, timber, lumber, hay, grass, or other personal property of another person, without lawful authority, shall be liable to the owner thereof for treble the amount of damages assessed therefor in an action to recover such damages. If upon trial, the defendant proves having probable cause to believe that such property was the defendant's own, or was owned by the person for whom the defendant acted, judgment shall be given for the actual damages only, and for costs.
There is also a rule for conversion of “negotiable instruments” under the Uniform Commercial Code (UCC). Basically, negotiable instruments are promises to pay money. They include things like promissory notes, checks, and CDs. Minn. Stat. 336.3-420(a) describes the conversion rule for negotiable instruments:
336.3-420 CONVERSION OF INSTRUMENT.
(a) The law applicable to conversion of personal property applies to instruments. An instrument is also converted if it is taken by transfer, other than a negotiation, from a person not entitled to enforce the instrument or a bank makes or obtains payment with respect to the instrument for a person not entitled to enforce the instrument or receive payment. An action for conversion of an instrument may not be brought by (i) the issuer or acceptor of the instrument or (ii) a payee or endorsee who did not receive delivery of the instrument either directly or through delivery to an agent or a co-payee.
(b) In an action under subsection (a), the measure of liability is presumed to be the amount payable on the instrument, but recovery may not exceed the amount of the plaintiff's interest in the instrument.
(c) A representative, other than a depositary bank, who has in good faith dealt with an instrument or its proceeds on behalf of one who was not the person entitled to enforce the instrument is not liable in conversion to that person beyond the amount of any proceeds that it has not paid out.
The bottom line is that when someone takes or keeps your stuff, you might be able to get a money judgment against that person through a conversion claim.
A civil theft claim also involves the taking of personal property. Civil theft is similar to conversion, but it also has characteristics of criminal theft. The advantage of a civil theft claim is that while it might be harder to prove than conversion, it could double the plaintiff's damages.
The Civil Theft Statute
Minn. Stat. § 604.14, subd. 1 provides for civil theft claims, stating:
Subdivision 1. LIABILITY FOR THEFT OF PROPERTY.
A person who steals personal property from another is civilly liable to the owner of the property for its value when stolen plus punitive damages of either $50 or up to 100 percent of its value when stolen, whichever is greater. If the property is merchandise stolen from a retail store, its value is the retail price of the merchandise in the store when the theft occurred.
As you can see, the civil theft statute has its own “punitive damages” that can double a claim. This is a risk to any defendant who refuses to return the property, and it gives leverage to the plaintiff.
A civil theft claim is distinct from any criminal prosecution. Subdivision 4 states that “the filing of a criminal complaint, conviction, or guilty plea is not a prerequisite to liability under this section.” This means that the plaintiff can bring a successful claim, even if the defendant was never prosecuted or found guilty.
If the plaintiff somehow recovers the personal property, the plaintiff can still have a claim. The damages would have to be reduced to account for the property being returned.
The statute indicates that the plaintiff “may” make a written demand to the defendant before starting a civil lawsuit. While it may not be required, it could be useful for a plaintiff because it could be further evidence of the defendant's refusal to return the property.
Connection to the Criminal Theft Statute
The civil theft statute uses the term “steals” without defining it. Courts have generally looked back to the criminal theft statute (Minn. Stat. § 609.52) for a proper definition.
There are many definitions of “theft” in the criminal statute. A common definition of theft is when a person:
intentionally and without claim of right takes, uses, transfers, conceals or retains possession of movable property of another without the other's consent and with intent to deprive the owner permanently of possession of the property.
Another definition is when a person commits theft by exercising temporary control of property in a manner that “manifests an indifference to the rights of the owner or the restoration of the property to the owner,” or if he “intends to restore the property only on condition that the owner pay a reward or buy back or make other compensation.” Id., subd. 2(5)(i), (iii).
There are many other prohibited acts in the criminal statute, so a person who wants to bring a civil theft claim may have options in the way he or she proves the civil theft claim.
Impact of a Criminal Theft Prosecution
When the other person is being prosecuted for criminal theft, it can impact the civil claim. The plaintiff will have figure out how best to use the criminal case to support the civil claim.
One strategy is to move forward as quickly as possible while the witnesses are “fresh” and there is maximum pressure on the defendant. It also might be necessary if there is a statute of limitations or other deadline requiring prompt action. Also, the sooner you commence a lawsuit, the sooner you can get a collectible judgment.
Another strategy is to wait out the criminal case. The prosecutors may develop evidence that you can use in your civil case (which saves you money). Also, a criminal conviction may help you prove your civil case, and a restitution order may reduce the need for a civil case altogether. These issues are discussed below.
Using Evidence from Criminal Case
As mentioned above, the civil theft claim can proceed with or without a criminal prosecution.
But when there is a criminal case, it means that law enforcement has investigated the matter and developed evidence. This evidence can be useful to a plaintiff in a civil case, but it might not be available until the investigation is completed or the criminal case is done. This can be a reason to hold off until the criminal case is done.
Using the Defendant's Conviction – Collateral Estoppel
There is another potential advantage of holding off on a civil claim until the criminal case is done. If the defendant is found guilty, that conviction can likely be used in the civil case. If so, it can be much easier for the plaintiff to prove a civil claim.
Under the doctrine of “collateral estoppel”, the defendant in a civil case probably cannot challenge the validity of the conviction (if the plaintiff uses it to prove his or her claim). “Collateral estoppel precludes the relitigation of issues which are both identical to those issues already litigated by the parties in a prior action and necessary and essential to the resulting judgment.” Ellis v. Minneapolis Comm'n on Civil Rights, 319 N.W.2d 702, 704 (Minn. 1982). “A criminal conviction can be used in a subsequent civil action to preclude argument by the convicted party on issues conclusively proved in the criminal trial.” Fain v. Anderson, 816 N.W.2d 696, 701 (Minn. Ct. App. 2012).
For collateral estoppel to allow a plaintiff to use the conviction in a civil case, the plaintiff must show:
(1) the issue was identical to one in a prior adjudication;
(2) there was a final judgment on the merits;
(3) the estopped party was a party . . . to the prior adjudication; and
(4) the estopped party was given a full and fair opportunity to be heard on the adjudicated issue.
Schlichte v. Kielan, 599 N.W.2d 185, 187-88 (Minn. Ct. App. 1999) (citation omitted), review denied (Minn. Nov. 17, 1999).
In other words, if the defendant had the ability to defend himself in the criminal case and lost, courts should not waste time re-hashing the same issues. As long as the issues in the civil and criminal cases are the same, the plaintiff should be able to use the conviction to prove the civil claim.
Therefore, this can be a good reason for a civil plaintiff to wait until a conviction is entered in the criminal case. Of course, if there is doubt about whether the defendant will be convicted, then the plaintiff could proceed with the civil case while the criminal case is pending.
A further reason for waiting out the criminal case is that the criminal judge can order the defendant to pay “restitution” to the victim. Restitution is part of the criminal sentence, so the defendant must pay it. If not, the defendant could be in contempt unless he lacks the ability to pay restitution. If the defendant pays the restitution, there may be no need for a civil case.
“[R]estitution is intended to compensate crime victims for their losses.” State v. Rey, 905 N.W.2d 490, 496 (Minn. 2018). In determining whether to order restitution, the district court considers “the amount of economic loss sustained by the victim as a result of the offense” and the “income, resources, and obligations of the defendant.” Minn. Stat. § 611A.045, subd. 1(a). A restitution hearing is held in the criminal case when the defendant challenges the prosecutor's request. If so, the victim might have to provide documents and even testify at a hearing.
If there has been a full civil settlement, restitution generally cannot be ordered. State v. Arends, 786 N.W.2d 885, 889-90 (Minn. Ct. App. 2010), review denied (Minn. Oct. 27, 2010). In that situation, the victim has already been compensated and restitution is not needed.
On the other hand, the criminal judge cannot deny restitution on grounds that the victim might bring a civil lawsuit. See Minn. Stat. § 611A.04, subd. 1 (“An actual or prospective civil action involving the alleged crime shall not be used by the court as a basis to deny a victim's right to obtain court-ordered restitution under this section.”). Even if the judge denies restitution, it does not prevent the victim from bringing a civil case. Minn. Stat. § 611A.04, subd. 3.
Restitution “may be enforced by any person named in the order to receive the restitution, or by the Crime Victims Reparations Board in the same manner as a judgment in a civil action.” Id. The victim can docket the restitution order without cost and then try to collect on it. Restitution cannot be discharged in bankruptcy. Any restitution paid by the defendant will be offset on damages in the civil case.
The bottom line is that if the defendant stole property from you, the criminal judge could order the defendant to pay you restitution. If the defendant pays it, you may not need a civil case. But it at least gives you options, including the option to seek “double damages” under the civil theft statute.
Options Related to Conversion and Civil Theft
It is important to understand how conversion and civil theft claims fit into the lawyer's “toolbox.”
Here are some alternatives or other options that a person might consider before starting a conversion or civil theft lawsuit:
- Demand and Voluntary Return: A plaintiff might want to make a formal request or demand to the defendant before starting a lawsuit. If it works, the plaintiff will have the property returned without the time and cost of a lawsuit. Even if the defendant does not return the property upon demand, it can be further evidence to support the plaintiff's claim.
- Replevin (a/k/a “action for claim and delivery”): Replevin is a civil claim used when the plaintiff or creditor wants the personal property back (rather than a money judgment). The judge can order that items be returned to the plaintiff (either at the start of the case or the end). A person that wants money damages does not typically bring a replevin claim.
- Self-Help Repossession: If you have a lien or security interest in personal property being held by another person, you can try to reclaim the property rather than get a money judgment. A self-help repossession is available under Minn. Stat. § 336.9-609, unless there would be a “breach of the peace”. If there would be a breach of the peace, you may have to bring a replevin or breach of contract claim.
- Conciliation Court: If the personal property at issue is under $15,000, conciliation court may be viable option. The filing fees are less and the case proceeds quickly. Usually, there is a hearing within a month or two. Minn. Stat. § 491A.01, subd. 5 allows a conciliation court judge to order the return of personal property or enter a money judgment against the defendant. This can be an efficient way to get a judgment, but if the property is more than $15,000 then a conversion or civil theft claim (with double damages) may be necessary.
- Attachment: “Pre-judgment attachment” allows a plaintiff to seize personal property of the defendant, and to hold it for purposes of satisfying a money judgment at the end of the case. It preserves the plaintiff's ability to collect a money judgment. Attachment can be another legal theory to use in a conversion or civil theft lawsuit to help you collect on an asset. If you want the item itself back, replevin is the more applicable theory.
- Trespass to Chattels: “Trespass to chattels” is a tort that is very similar to conversion. “Chattel” just means personal property. Trespass to chattels is a less serious and more temporary “dispossession” of personal property. Conversion is a serious interference with property rights. These claims are often brought together to preserve options for the plaintiff.
- Other Civil Claims: The plaintiff can certainly add other civil claims to a conversion or civil theft lawsuit. However, there generally cannot be a double-recovery for the plaintiff. Under the independent-duty rule, “when a plaintiff seeks to recover damages for an alleged breach of contract he is limited to damages flowing only from such breach except in exceptional cases where the defendant's breach of contract constitutes or is accompanied by an independent tort.” Wild v. Rarig,302 Minn. 419, 440, 234 N.W.2d 775, 789 (1975). “An independent tort may accompany a breach of contract when the defendant has a legal duty to the plaintiff arising separately from any duty imposed in the contract.” Toyota-Lift of Minn., Inc. v. Am. Warehouse Sys., LLC, 868 N.W.2d 689, 696 (Minn. Ct. App. 2015), aff'd, 886 N.W.2d 208 (Minn. 2016). This means that a plaintiff could potentially recover for a breach of contract and conversion, but would have an added burden to prove additional damages.
- Wage Theft: Unpaid wages and wage theft might be considered conversion or civil theft. However, the employee generally makes employment claims under Chapter 177 or Chapter 181 of Minnesota Statutes. Employment claims might have the benefit of penalties and attorney's fees (something a conversion or civil theft claim might not necessary allow).
- Probate Context: If the situation involves property that will be part of a decedent's estate, there is a separate conversion rule. Minn. Stat. § 525.392 states: "If any person embezzles, alienates, or converts to personal use any of the personal estate of a decedent or ward before the appointment of a representative, such person shall be liable for double the value of the property so embezzled, alienated, or converted."
When someone takes your personal property, a conversion or civil theft claim can give you a money judgment on which to collect. The civil theft claim can even result in double damages for the plaintiff.
Remember that a criminal restitution order can become a judgment for the victim without the need for a separate civil claim. However, a plaintiff in a civil claim can proceed independent of the criminal case.
The bottom line is that the victim has options in civil court to be compensated for the loss, regardless of whether there is a successful criminal prosecution.
If you need legal advice or representation on a conversion or civil theft issue, Contact Us for a free consultation. With offices in Shakopee (Scott County) and Litchfield (Meeker County), we serve clients throughout the Twin Cities and Greater Minnesota.