Conversion Statute Permits Treble Damages for Theft
Changes were recently made to the Michigan Statute governing recovery of damages for theft. The Conversion Statute now allows a person to get three times the amount of actual damages sustained from a person who stole or embezzled property for their own use. To support a claim, the defendant must have obtained the property without the owners consent and must have an obligation to return the property to the rightful owner.
Prior to the change, the law permitted a treble damage claim only against a person “buying, receiving, possessing, concealing or aiding in concealment” of stolen or embezzled property. Because the prior law did not include the actual thief or embezzler, a claim under the statute could have the seemingly unfair result that the person who receives stolen goods gets hit with a treble damage claim, while the actual thief or embezzler does not.
The amendment to include the actual thief or embezzler is very useful to a person or business whose property has been stolen, as recovery is no longer restricted to the person who receives the stolen property or aids and abets in its concealment.
In our legal practice we have found the Conversion Statute very effective in recovery of damages for stolen property. First, lawyers representing defendants who are being sued under the Statute recognize their clients face risks of liability far in excess of the value of the stolen items, and that the Statute permits recovery of costs and attorneys fees. Consequently, defendants counsel advise clients to negotiate a settlement early in the litigation, rather than face the risk of a large judgment. Because of onerous nature of the treble damages provision, we have been able to obtain very favorable negotiated settlements.
Second, if a judgment is obtained against a person under the statute, it will generally be non-dischargeable in a bankruptcy proceeding, meaning that even if the defendant files for bankruptcy, the debt will survive. This gives defendants additional motivation to negotiate a resolution on terms favorable to the plaintiff.
Examples of how the Statute can be applied by a business include claims against a person who commits embezzlement of company funds or property, or cases of theft of company property by third parties. A common scenario is a trusted company bookkeeper who experiences financial difficulty and begins paying personal debts with company funds. By the time an audit uncovers the theft, the company may have lost thousands of dollars. In such instances we have made claims under the Conversion Statute and obtained very favorable settlements quickly, without unwelcome publicity.
If you or your business has been a victim of theft, fraud or embezzlement, contact an attorney in our business group for fast, effective and discrete resolution of all claims in a manner that best protects your legal rights.