As a business owner in Florida, protecting your business assets is absolutely crucial. While theft typically leads to charges, there are situations where the loss of property access may not be considered civil theft but rather falls under the category of conversion.
It is common for people to mistakenly use the terms ” theft” and “conversion” interchangeably. However, it’s important to clarify these distinctions and provide guidance on how to protect your business from risks associated with civil theft and conversion.
What is conversion?
Under Florida law, as outlined in Ice v. Cosmopolitan Residences on South Beach, conversion “is the exercise of wrongful dominion and control over the property to the detriment of the actual owner.” You may be wondering what exactly this means: conversion is a form of theft involving the unauthorized use or possession of someone else’s property.
To break it down even further, if a person takes or uses someone else’s property without permission and plans to keep or dispose of it in a way that goes against the owner’s rights, they could be held responsible for conversion. This can lead to both criminal and civil punishment.
For example, if a friend takes another person’s car without permission with the intention of either keeping it for themselves or selling it, the friend would likely be liable for conversion because he took it without authorization and intended to deprive the owner of his car. In a business context, if an individual takes confidential company information intending to use it for personal gain or to benefit a competitor, they may be liable for conversion.
In Florida, Section 95.11 is the relevant statute governing conversion, setting a four-year statute of limitations for such cases. This legal provision establishes the timeframe within which claims related to conversion must be addressed, providing a guideline for the resolution of conversion disputes.
What is required to prove a case of conversion in Florida?
If you are to successfully plead a case of conversion under Florida law, certain criteria must be met. This includes the following:
- Plaintiff’s Ownership or Right to Possession: The plaintiff must establish ownership or the right to possession of the property in question. For example, if a business owner can provide documented evidence of owning a specific piece of equipment or intellectual property.
- Defendant’s Wrongful Act or Inconsistent Conversion: The defendant’s actions must demonstrate conversion through a wrongful act or behavior inconsistent with the plaintiff’s property rights. For example, if an employee, without authorization, sells company-owned software to a competitor, the unauthorized sale represents a conversion by the employee, as it goes against the company’s property rights.
- Resulting Damages: There must be tangible damages resulting from the conversion. For example, in a corporate embezzlement scenario, if a CFO fraudulently diverts funds from company accounts for personal use, the financial losses incurred by the company, including the stolen amount and any subsequent financial setbacks, constitute tangible damages in a civil theft or conversion claim.
If the facts of the case meet these requirements, then you have a number of options you can choose from to remedy the situation. This includes:
- Return of Property: If the property is in a returnable condition, a court may order the defendant to return it to the rightful owner.
- Monetary Damages: Successful plaintiffs may be awarded damages, including compensatory damages. This could include the value of the taken property, expenses incurred due to the conversion, and, in some instances, punitive damages.
- Injunctions: In cases where there’s a risk of the defendant continuing the behavior leading to conversion, a court may issue an injunction. This legal order prohibits the defendant from persisting in the actions that led to the conversion.
What is civil theft?
In Florida, the term “civil theft” typically refers to a legal claim allowing someone to seek damages for the unauthorized taking of their property with the intent to deprive them of it. This is different from criminal theft, which involves legal action under the state’s criminal laws.
It’s important to note that a civil theft case is a separate legal matter from a criminal theft case, and the standard of proof is different. In a civil theft case, the plaintiff must show their case by a preponderance of the evidence, meaning it’s more likely that the defendant took the property without the plaintiff’s consent.
An example of civil theft might be when an employee copies sensitive client data or proprietary business strategies without authorization and plans to leverage this information for personal or competitive advantage; the employer may have grounds to pursue a civil theft claim. In such a scenario, the employer could seek damages for the unauthorized taking of valuable business assets and the potential harm caused to the company’s competitive position.
The Florida Statute addressing civil theft is Section 772.11, which states that if the plaintiff sues under this rule, they are entitled to the monetary equivalent of the damages sustained. This includes either (1) three times the value of the item stolen or (2) if the damages are less than $200, then a minimum of $200, plus attorneys’ fees and court costs. The statute also specifies that the plaintiff must make a written demand to the defendant for the owed amount before suing. Meanwhile, Section 812.014 outlines the criteria needed to prove a civil theft claim.
What is required to prove a case of civil theft in Florida?
A civil theft claim is much more difficult to prove because a party must show criminal intent to steal by clear and convincing evidence and the property must be identifiable. The plaintiff must show that the defendant knowingly:
- Obtained or used, or tried to obtain or use, the plaintiff’s property.
- Acted with felonious intent.
- Intended either permanently or temporarily to (1) deprive the plaintiff of their right to benefit from the property or (2) appropriate the property for the defendant’s use or the use of any unauthorized person.
It is important to note that in Florida, there are limited circumstances where a plaintiff can pursue a civil theft claim, especially in contractual relationships. Civil theft doesn’t cover damages for a breach of contract.
In a case like Kay v. Katzen, which involved a breach of contract and civil theft related to employment bonuses, the court dismissed the civil theft claim because it “was clearly a contractual claim, not a tort claim, and accordingly, the actions for conversion, civil theft, and punitive damages did not lie.” To establish civil theft, the plaintiff must show that the action goes beyond and independently breaches the terms of a contract.
When the facts meet these requirements of civil theft mentioned above, claimants have different avenues they can take
- Monetary Damages: The court can award a minimum of $200 to compensate the plaintiff for the theft or three times the amount of the property stolen.
- Restitution: The court may order the defendant to return the stolen property to the plaintiff.
- Injunctive Relief: The court could issue an injunction, directing the defendant to cease specific actions, such as continued possession of the stolen property.
- Attorneys’ Fees and Costs: Plaintiffs may also be able to recover their attorneys’ fees and costs incurred during the legal proceedings.
How can you protect your business from civil theft and conversion?
Both civil theft and conversion pose significant threats to the well-being of your business, and Florida business owners must understand the difference between the two. So, how can you protect your business from civil theft and conversion? It is important to take proactive measures, including the following:
- Implement Comprehensive Contracts: You should draft and enforce clear and comprehensive contracts with employees, contractors, and business partners in which you clearly outline expectations, responsibilities, and the consequences of any unauthorized use or taking of business assets.
- Employee Training and Awareness: Regular training sessions to educate employees about the importance of respecting intellectual and physical property rights can promote a culture of integrity and ethical conduct within your organization.
- Restrict Access to Sensitive Information: Limiting access to confidential and proprietary information within your organization is advisable, as is utilizing technology to enforce access controls to ensure that only authorized personnel can access critical business data.
- Regular Audits and Inventories: Regular audits of your business assets, including intellectual property and physical inventory, can help identify any discrepancies or potential signs of theft early on, allowing for timely intervention.
- Secure Legal Counsel: You must engage legal professionals specializing in business and commercial law to provide guidance on potential vulnerabilities and effective protective measures. A legal expert can help you understand the complexities of Florida’s civil theft and conversion laws.
With these measures as part of your business strategy, you can significantly reduce the risk of falling victim to civil theft or conversion, ultimately protecting your business.
The Campbell Law Group P.A. brings extensive expertise in business and commercial litigation. Our primary goal is to assist all our clients in minimizing the need for unnecessary conflicts and litigation whenever possible. Our firm is well-equipped to represent you or your business effectively when litigation becomes unavoidable. We strive to guide you through the complexities of litigation and work towards achieving a fair outcome.
We accept cases in the South Florida area, including Miami Beach, Coral Gables, Coconut Grove, South Miami, Pinecrest, Brickell, Edgewater, Doral, and Wynwood. Additionally, we accept cases in Broward and Palm Beach County, Tampa, Orlando, and throughout the rest of Florida.