Opinion
No. 332568
08-10-2017
GOLDCORP, INC., Plaintiff-Appellant, v. ZEIDMAN'S JEWELRY & LOAN OF MICHIGAN and ZEIDMAN'S JEWELRY & LOAN OF SOUTHFIELD, Defendants-Appellees, and JIRAIR KAYPEKIAN, Defendant.
UNPUBLISHED Oakland Circuit Court
LC No. 2015-147722-CB Before: GADOLA, P.J., and MURRAY and CAMERON, JJ. PER CURIAM.
This case involves a dispute over a 3.24 carat G-VS2 round diamond with a retail value of approximately $48,000. Plaintiff, GoldCorp, Inc. (GoldCorp), appeals as of right an order dismissing the case without prejudice. On appeal, GoldCorp challenges an earlier order in which the trial court granted a motion for summary disposition filed by defendants Zeidman's Jewelry & Loan of Michigan and Zeidman's Jewelry & Loan of Southfield (collectively Zeidman's), with regard to GoldCorp's common-law and statutory conversion claims. We affirm.
I. FACTS AND PROCEDURAL HISTORY
In November or December of 2014, a diamond broker, KCD, run by Avi Arusi and Hovig Kechichian, acquired the diamond from a company in Tel Aviv, Israel, known as Clear Diamond. Arusi described himself as a representative of Clear Diamond. He explained that he did not pay for the diamond, but Clear Diamond shipped it to him because he "was supposed to sell it . . . ." Defendant Jirair Kaypekian is also a diamond broker. In December 2014, KCD transferred the diamond to Kaypekian on consignment after Kaypekian claimed he had found a purchaser for the diamond. Arusi agreed that Kaypekian "didn't buy [the diamond] and he didn't put any money down to secure it[.]" Rather, KCD allowed Kaypekian to hold the diamond because he claimed to have a serious buyer. However, after Kaypekian acquired the diamond, he did not sell it, but rather pawned it at Zeidman's in exchange for a $20,000 loan.
Kaypekian testified that he owned the diamond at the time he pawned it at Zeidman's because he had agreed to purchase it for $40,000 and had given Kechichian three post-dated checks for February, March, and April of 2015. Kaypekian testified that he received a memo when he obtained the diamond that "just says 3.24 carat diamond 40,000. And then . . . an invoice when I gave the checks." Kaypekian acknowledged, however, that he did not have money in his account to cover the checks at the specified future dates written on the checks.
According to Arusi, Kaypekian lied by claiming that he had sold the diamond and that he was waiting for the customer to pay the full purchase price when he had actually pawned the diamond at Zeidman's. Arusi explained that he and Kechichian asked Kaypekian for the money from the sale, and Kaypekian gave Kechichian the three post-dated checks totaling approximately $40,000. When asked why they accepted three post-dated checks from Kaypekian, Arusi explained that Kaypekian "told us that the jewelry store had to make the ring. And they got [the] deposit and . . . it's going to take about two weeks, three weeks until they finish the ring." Arusi testified that he took the checks to the bank and discovered that they were "no good," so he and Kechichian contacted Kaypekian and asked him to identify the customer who purchased the diamond. When Kaypekian did not respond, Arusi concluded that he was lying, began trying to locate the diamond, and contacted other diamond brokers and the police.
Meanwhile, Kaypekian also owed a significant amount of money to GoldCorp, run by Walid Khalife. In April or May of 2015, Kaypekian assigned his original pawn ticket for the diamond to Khalife in exchange for partial repayment of the debt he owed to GoldCorp. There was no written agreement documenting the assignment. The right to redeem the diamond under the pawn ticket did not expire until June 26, 2015.
Arusi testified that during the search for the diamond, Kechichian spoke with Khalife and Khalife showed him the pawn ticket. Kechichian faxed a copy of the pawn ticket to Arusi, and Arusi then went to Zeidman's and told the owner, Thomas LaBret, that he was the rightful owner of the diamond and that he had filed a police report. Arusi explained that he showed LaBret a copy of the pawn ticket Kechichian faxed him and told LaBret that he would be willing to pay to get the diamond out of pawn, but he would need to sell the diamond to refund the full $20,000 loan amount with any accumulated interest.
Arusi explained that he was willing to repay Keypekian's loan, even though it was his position that Kaypekian pawned the diamond without authority, because it would allow him to mitigate his losses and he could then go after Keypekian for the rest of the money.
LaBret explained that he spoke with the officer in charge of the investigation and she "told me that [Arusi] had filed against [Kaypekian] and that the diamond belonged to [Arusi]." LaBret then called Kaypekian to discuss Arusi's claims, and Kaypekian agreed that the diamond belonged to Arusi. However, because the redemption period for the diamond had not yet expired, LaBret told Kaypekian that he would need to sign an affidavit of lost pawn ticket in order to release the diamond to Arusi. Kaypekian went to Zeidman's and signed an affidavit of lost pawn ticket, in which he declared "that the original pawn ticket has been lost or destroyed and that I have not sold or transferred it to anyone."
In May 2015, Arusi retrieved the diamond from Zeidman's. Arusi explained that he gave LaBret another stone as collateral and took the diamond, which he intended to sell so he could repay LaBret the loan amount and any interest owed by Kaypekian. On June 19, 2015, before the redemption period under the original pawn ticket had expired, Khalife appeared at Zeidman's and attempted to redeem the diamond. He was informed that Arusi had taken the diamond and that Zeidman's no longer had it. GoldCorp then filed the instant action against Zeidman's and Kaypekian, raising claims of common-law and statutory conversion as to Zeidman's and fraudulent misrepresentation as to Kaypekian.
After receiving a copy of GoldCorp's complaint, LaBret called Arusi and asked him to return the diamond. Arusi agreed and retrieved the other stone he had given Zeidman's as collateral. Zeidman's filed a motion to dispose of the diamond, asking the trial court to dismiss Zeidman's from the lawsuit in exchange for an order allowing GoldCorp to redeem the diamond within 14 days by paying $23,606, representing the loan amount plus accumulated interest, or to allow Zeidman's to dispose of the diamond if GoldCorp failed to redeem the diamond within the specified time period. In October 2016, the trial court issued an order giving GoldCorp 14 days to redeem the diamond for $23,606. The order stated that if GoldCorp failed to redeem the diamond, Zeidman's would have the right to dispose of it. GoldCorp failed to redeem the diamond in the time period specified by the trial court's order.
Zeidman's then filed a motion for summary disposition under MCR 2.116(C)(8) and (C)(10), arguing that GoldCorp's conversion claims failed as a matter of law because Kaypekian never held a valid ownership interest in the diamond and therefore could not transfer an ownership interest to GoldCorp by assigning the pawn ticket. The trial court agreed, noting that Kaypekian claimed in his deposition testimony that he "purchased" the diamond, but also admitted that his accounts never held sufficient funds to pay for it. Because Kaypekian was never the rightful owner of the diamond, the trial court concluded, he had no ownership interest to transfer to GoldCorp and GoldCorp had no interest upon which to base its conversion claims.
II. STANDARD OF REVIEW
We review de novo a trial court's decision on a motion for summary disposition. Parise v Detroit Entertainment, LLC, 295 Mich App 25, 27; 811 NW2d 98 (2011). Zeidman's moved for summary disposition under both MCR 2.116(C)(8) and (C)(10), and the trial court did not specify under which subsection it decided the motion. However, because it is clear that the trial court considered documents outside of the pleadings in rendering its decision, we will review this issue under the standards applicable to a motion brought under MCR 2.116(C)(10). See Hughes v Region VII Area Agency on Aging, 277 Mich App 268, 273; 744 NW2d 10 (2007).
When reviewing a motion brought under MCR 2.116(C)(10), we consider any affidavits, pleadings, depositions, admissions, or other documentary evidence submitted by the parties in a light most favorable to the party opposing the motion. Quinto v Cross & Peters Co, 451 Mich 358, 362; 547 NW2d 314 (1996). Summary disposition is appropriate under MCR 2.116(C)(10) if there is no genuine issue of material fact and the moving party is entitled to judgment as a matter of law. West v Gen Motors Corp, 469 Mich 177, 183; 665 NW2d 468 (2003). "A genuine issue of material fact exists when the record, giving the benefit of reasonable doubt to the opposing party, leaves open an issue upon which reasonable minds might differ." Id. (citations omitted).
III. DISCUSSION
"Under the common law, conversion is any distinct act of dominion wrongfully exerted over another's personal property in denial of or inconsistent with his rights therein." Aroma Wines & Equip, Inc v Columbian Distribution Servs, Inc, 497 Mich 337, 346; 871 NW2d 136 (2015) (quotation marks and citation omitted). Common-law conversion previously required a converter to make some use of property that amounted to a total deprivation of the property by its rightful owner, but Michigan case law now holds that common-law conversion broadly encompasses "any conduct inconsistent with the owner's property rights." Id. at 353.
Michigan also provides a statutory remedy for conversion in MCL 600.2919a, which is separate from and additional to common-law conversion. Id. at 361. MCL 600.2919a states that a plaintiff may "recover 3 times the amount of actual damages sustained, plus costs and reasonable attorney fees" if the plaintiff is damaged as the result of "[a]nother person's . . . converting property to the other person's own use." "[T]he separate statutory cause of action for conversion 'to the other person's own use' requires a showing that the defendant employed the converted property for some purpose personal to the defendant's interests, even if that purpose is not the object's ordinarily intended purpose." Aroma Wines, 497 Mich at 361.
To maintain an action for conversion, the plaintiff must establish a superior title or possessory right to the property than that held by the defendant. See Attorney General v Hermes, 127 Mich App 777, 786; 339 NW2d 545 (1983) (explaining that a plaintiff with "less than a complete interest" in property could maintain an action for conversion because the plaintiff had a "far superior interest than that enjoyed by defendants"); Rohe Scientific Corp v Nat'l Bank of Detroit, 133 Mich App 462, 468; 350 NW2d 280, mod on other grounds on reh 135 Mich App 777 (1984) ("If defendant's right to possession was greater than that of plaintiff's, plaintiff could not maintain an action for conversion."). The plaintiff bears the burden of proving that he or she had a possessory right or title to the property at the time of an alleged conversion. Wessels v Beeman, 87 Mich 481, 488; 49 NW 483 (1891).
GoldCorp's statutory and common-law conversion claims against Zeidman's arise from its holding the original pawn ticket issued for the diamond, which represented the terms of an agreement between Zeidman's and Kaypekian. GoldCorp's claim of title to or right to possess the diamond is thus premised on its status as an assignee of the contract between Zeidman's and Kaypekian. "An assignee stands in the shoes of the assignor and acquires the same rights as the assignor possessed." First of America Bank v Thompson, 217 Mich App 581, 587; 552 NW2d 516 (1996). Accordingly, GoldCorp only acquired the possessory rights and ownership interest in the diamond that Kaypekian previously held.
Kaypekian asserted in numerous instances during his deposition that he "bought" or "purchased" the diamond. He argued that he owned the diamond, and it was not stolen, but he owed money and could not pay for it. Merely possessing an item on credit does not necessarily render the object stolen or result in conversion; however, this is only the case if the original owner voluntarily consented to the creation of a debtor-creditor relationship. See Lawsuit Fin, LLC v Curry, 261 Mich App 579, 591; 683 NW2d 233 (2004) (explaining that an action for conversion arises if a defendant "obtained the [property] without the owner's consent to the creation of a debtor-creditor relationship") (quotation marks and citation omitted).
Despite Kaypekian's repeated statements that he "bought" or "purchased" the diamond, the record lacks evidence proving that the true owner of the diamond, Clear Diamond, voluntarily consented to the creation of a creditor-debtor relationship. To the contrary, Arusi testified that he and Kechichian, who were the first brokers given the diamond by Clear Diamond, only allowed Kaypekian to hold the diamond because he represented that he had a serious buyer. They also only accepted the post-dated checks because Kaypekian told them an elaborate story about how his buyer was having the diamond put in a ring that would take several weeks to complete. Arusi testified that he and Kechichian eventually took the checks to the bank and determined that they were "no good," after which they confronted Kaypekian. When Kaypekian could not identify his buyer, Arusi filed a police report and he and Kechichian began searching for the diamond. Under the circumstances, at the time Kaypekian pawned the diamond, he was in essence holding a converted good and had no valid ownership claim over the diamond. The trial court therefore did not err by concluding that Kaypekian had no ownership interest to transfer to GoldCorp.
At one point during Kaypekian's deposition testimony, he asserted that Arusi and Kechichian agreed to allow him to "pay them slowly." However, Kaypekian stated that this only occurred after Arusi and Kechichian contacted the bank and determined that there was no money in Kaypekian's account for the post-dated checks and after they made repeated demands for payment or return of the diamond. Given the circumstances, even accepting Kaypekian's testimony as true, this hardly represents a voluntary arrangement. Moreover, it appears that Clear Diamond was the true owner of the diamond, and it is not clear that Arusi or Kechichian had authority to enter a debtor-creditor relationship to sell the diamond to Kaypekian on Clear Diamond's behalf. Accordingly, Kaypekian's testimony is insufficient to create a genuine issue of material fact regarding his purported ownership of the diamond. See West, 469 Mich at 183 (explaining that no genuine issue of material fact exists if the record does not leave open an issue upon which reasonable minds could differ). --------
GoldCorp argues that the trial court erred by concluding that Kaypekian did not have an ownership interest in the diamond because "[n]o where on the record is there any testimony that the checks were returned NSF." Whether the post-dated checks were returned for insufficient funds is irrelevant, however, if the true owner of the diamond did not consent to enter a debtor-creditor relationship with Kaypekian. See Lawsuit Fin, LLC, 261 Mich App at 591. Moreover, Arusi testified that he and Kechichian contacted the bank and discovered that Kaypekian's checks were "no good," and Kaypekian himself acknowledged that he did not have money in his account to cover the checks at the specified future dates written on the checks. GoldCorp's argument in this regard therefore lacks merit.
GoldCorp also argues that the fact that Arusi agreed to return the diamond to Zeidman's after GoldCorp initiated its lawsuit and agreed to pay the loan and interest Kaypekian owed to Zeidman's was inconsistent with the proposition that KCD was the true owner of the diamond. GoldCorp also argues that the trial court's order releasing the diamond to Zeidman's was improper if KCD owned the diamond. Whether KCD was the true owner of the diamond and whether Arusi's and the trial court's actions were consistent with this proposition is irrelevant to whether Kaypekian held a valid ownership interest in the diamond that he could conceivably transfer to GoldCorp. It appears that Clear Diamond was the true owner of the diamond and Arusi only claimed ownership of the diamond in his capacity as the original diamond broker or as a representative of Clear Diamond. The rights of these parties are not being litigated in the instant action. Instead, the only relevant inquiry is whether Kaypekian held a valid ownership interest or possessory right in the diamond that he could assign to GoldCorp. Because the record does not support that Kaypekian had such an interest or right, the trial court did not err by dismissing GoldCorp's conversion claims against Zeidman's.
Affirmed.
/s/ Michael F. Gadola
/s/ Christopher M. Murray
/s/ Thomas C. Cameron