A former employee keeps company equipment. A vendor refuses to return inventory. A business partner transfers funds that belong to you. These situations may support a conversion claim in California, but not every property dispute or unpaid bill qualifies. California businesses and individuals need to distinguish wrongful control over property from a contract disagreement. This article explains what conversion requires, which property may qualify, what evidence to preserve, and when to seek legal advice.
What does a conversion claim in California require?
Conversion is a civil claim involving wrongful interference with someone else’s personal property. It does not require a criminal theft conviction. The central question is whether another person exercised control over property in a way that violated your ownership or right to possession.
California’s civil jury instruction for conversion, CACI No. 2100, identifies the essential issues. In practical terms, you generally need to establish:
- You owned the property, possessed it, or had a right to possess it.
- The other party knowingly or intentionally acted in a way that substantially interfered with your ownership or right to possess it, such as by taking it, retaining it, transferring it, or refusing to return it.
- You did not consent to that conduct.
- The conduct caused you harm.
The defendant need not know that the property belongs to someone else or intend to act wrongfully, but must knowingly or intentionally perform the act that substantially interferes with your ownership or right to possess the property. Accidental damage is not automatically conversion.
Consent and possession rights matter. If a contract permits a vendor to keep equipment until a specified event, the contract may affect whether continued possession is wrongful. A valid lien can also change the analysis. A business litigation attorney can evaluate those rights before you demand a return or file suit.
Which business property can support a conversion claim?
Physical property presents the clearest examples: machinery, tools, computers, vehicles, inventory, and business records. Real estate itself is not the subject of a conversion claim, although disputes involving movable property located on real estate may qualify.
Money requires closer attention. California generally does not permit conversion claims based solely on a failure to pay a debt. A claim involving money ordinarily requires a specific, identifiable sum that belongs to the plaintiff, rather than a general obligation to pay.
- Equipment retained after termination: Company-owned computers kept after an employee’s authority to possess them ends may support a claim.
- Inventory transferred without permission: A warehouse operator’s unauthorized sale of your goods may qualify.
- Entrusted funds diverted: Money provided for a specific purpose may support conversion, depending on ownership, identification, and the agreement.
- An unpaid invoice: A customer’s failure to pay usually points to a contract claim, not conversion by itself.
In Voris v. Lampert (2019) 7 Cal.5th 1141, the California Supreme Court rejected conversion as a remedy for unpaid wages. The decision reinforces that an obligation to pay money is not necessarily wrongful control over property already belonging to another person.
Digital assets and electronically stored information require a fact-specific analysis. Copying information, withholding access, and taking exclusive control are different acts. Do not assume that every misuse of business data supports conversion.
What evidence should you preserve?
Build a clear record of ownership, permission, and the disputed conduct. Useful evidence includes:
- Purchase receipts, asset lists, serial numbers, titles, and photographs.
- Contracts explaining who owns the property and when it must be returned.
- Emails or messages showing delivery, limited permission, or revoked access.
- Bank records tracing specific funds and their intended purpose.
- Written return requests, responses, and records of attempted delivery.
- Documents showing property value and losses caused by its absence.
A written demand can establish what you requested and how the other party responded. When possession began lawfully, a demand and refusal may be important to establishing wrongful retention. A demand is not required in every conversion case, however, and sending one does not necessarily restart the filing deadline.
Avoid taking property by force, entering premises without permission, or accessing accounts without authorization. Those actions can create separate legal problems. Preserve original records and ask counsel about lawful recovery options.
What remedies may be available?
California Civil Code section 3336 provides that the detriment caused by wrongful conversion is presumed to be the property’s value at the time of conversion with interest, or an amount sufficient to indemnify the plaintiff for the natural, reasonable, and proximate loss that proper prudence would not have avoided, plus fair compensation for time and money properly expended in pursuing the property.
The calculation is not simply whatever amount appears on a demand letter. Market value, depreciation, the timing of the conversion, and documented losses can affect recovery. Return of the property may affect the damages analysis, but under Civil Code section 3337, a defendant whose possession was wrongful from the beginning cannot rebut the section 3336 damages presumption merely by subsequently applying the property to the owner’s benefit without the owner’s consent.
If recovering the actual property is the priority, counsel may evaluate a claim for its return and whether a prejudgment claim-and-delivery procedure is available. Punitive damages are not automatic; they require a separate evidentiary basis under California Civil Code section 3294.
What deadline applies to a California conversion claim?
California Code of Civil Procedure section 338(c)(1) provides a three-year limitation period for an action for taking, detaining, or injuring goods or chattels, including an action for specific recovery of personal property. The applicable period should be confirmed for the particular claim and property. Determining when that period starts can be more complicated than identifying when you first demanded a return.
Accrual, delayed discovery, and any tolling depend on the facts and applicable law. Contract claims arising from the same dispute may have different deadlines. Do not assume negotiations, a police report, or repeated return requests suspend the time to sue.
Talk to a California business attorney
If someone is keeping property or diverting funds that belong to you, Itkin Law offers a free consultation to discuss your rights, evidence, and possible next steps. Schedule a free consultation or call (424) 603-8888.
This article is attorney advertising and provides general information only. It is not legal advice and does not create an attorney–client relationship. The law changes, and this article reflects the law as of its publication date. Every situation is different — contact us to discuss how the law applies to your exact circumstances. See our full disclaimer.
