Day on Torts

Lease interest was not sufficient to establish ownership rights for conversion claim.

Where plaintiff’s complaint asserting a claim for conversion alleged that she was the lessee of a vehicle, she failed to “establish the required element that [defendant’s] retaking of the automobile was in ‘defiance of the true owner’s rights to the chattel,’” and dismissal was affirmed. (internal citation omitted).

In Meade v. Paducah Nissan, LLC, No. M2021-00563-COA-R3-CV, 2022 WL 2069160 (Tenn. Ct. App. June 9, 2022), plaintiff and defendant husband were in the process of getting divorced. Defendant husband was the managing agent for defendant car lot, and the complaint alleged that plaintiff and defendant had entered into an oral agreement at the beginning of their relationship that plaintiff would lease one of defendant’s demonstrator vehicles, and said lease would be renewed each year. During the divorce proceedings, defendant allegedly asked plaintiff to sign a written agreement to continue the lease, which plaintiff refused to sign because it was “onerous, high risk, and legally ineffective.” Defendant subsequently “repossessed” the vehicle, leaving plaintiff to drive a much smaller vehicle.

Plaintiff filed this action asserting various claims, including one for conversion of the vehicle. The trial court granted defendant’s motion to dismiss, ruling that the complaint did not establish that the “retaking of the automobile was in defiance of the true owner’s rights,” and the Court of Appeals affirmed. (internal citation omitted).

A plaintiff making a conversion claim must show “(1) an appropriation of another’s tangible property to one’s use and benefit,; (2) an intentional exercise of dominion over the chattel alleged to have been converted; and (3) defiance of the true owner’s rights to the chattel.” (internal citation omitted). Here, plaintiff could not prove her claim for conversion because her complaint admitted that she simply leased the vehicle, while defendant “remained at all times the true owner of the automobiles that she was allowed to drive.”

The Court pointed out that there is no Tennessee caselaw supporting the argument that “a lease or bailment was sufficient to meet the final element of conversion…,” but that caselaw instead “confirms that, in the typical case, the true owner of a property subject to a bailment is the bailor, not the bailee.” The Court reasoned:

Tennessee law has made clear that possession is not sufficient to establish a conversion, defiance of the true owner’s rights must be alleged. But as the caselaw above shows, a bailee or lessee is simply not a true owner of property in his or her possession by virtue of a bailment or lease. Thus, even assuming arguendo that a valid contract for continued possession of the personalty existed, [plaintiff] has not alleged an ownership interest of any kind sufficient to meet the true owner element of the tort of conversion.

(internal citation omitted). Dismissal was accordingly affirmed.

The conversion portion of this opinion makes clear that a typical lessee will not be able to successfully make a conversion claim as to property that he or she has leased, as conversion must interfere with the true owner of the property’s rights, and a lease does not create such an ownership interest.

This opinion was released two months after oral arguments in this case.

Note:  Chapter 22 of Day on Torts: Leading Cases in Tennessee Tort Law has been updated to include this decision.  Because this case addressed an issue that had not previously been expressly addressed in Tennessee law, a new section was added.

Day on Torts: Leading Cases in Tennessee Tort Law contains summaries of leading cases on over 500 topics and citations to more than 1500 additional cases.  The 500,000+ word book  (and two others, Tennessee Law of Civil Trial and Compendium of Tennessee Tort Reform Cases) is available by subscription at www.birddoglaw.com and is continually updated as new decisions and statutes impact Tennessee law.  Click on the link to see the book’s Table of Contents.

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