Superior Court of California 

County of Los Angeles – West District  

Beverly Hills Courthouse / Department 205 

MOVING PARTY: Defendant Traci Honda LaFlower 

RESPONDING PARTY: Plaintiff Michael Phillips  

BACKGROUND 

This action arises from an investment in a cannabis cultivation company.  Plaintiff Michael Phillips invested $100,000 in The LaFlower Group, LLC (“LLC”), a cannabis business.  (Undisputed Material Facts (“UMF”) No. 14.)  Defendant Scott LaFlower (“Scott”) formed the LLC.  (UMF No. 16.)  Scott also owns his own construction company called LaFlower Construction, Inc. (“LCI”).  (UMF No. 4.)   

The funds Plaintiff invested were wired into LCI’s Union Bank business account (the “Account”), because LLC did not have its own account at the time.  (UMF Nos. 10, 17-20.)  Plaintiff knew that his funds were going into the Account.  (UMF No. 23.)  Defendants claim Plaintiff’s investment funds were used to pay-off land owned by the LLC (UMF No. 22); Plaintiff disputes this fact.  (Response to Undisputed Material Facts (“RUMF”) No. 22.)   

Traci LaFlower is married to Scott LaFlower.  (UMF No. 3.)  Traci never owned or operated LCI or LLC.  (UMF Nos. 8, 23, 24, 25.)  Traci is not a member, employee or otherwise involved in running the LLC.  (UMF Nos. 23, 24, 25, 26.)  Traci is not a signatory or owner of the Account.  (UMF Nos. 13, 21.)  Traci claims she did not take LLC funds (UMF No. 24, 28), but Plaintiff claims Traci received six checks totaling $3,569.66 from the Account (RUMF Nos. 24, 28.)     

Plaintiff sued, alleging Scott and Traci converted LLC’s assets for their personal use or for the use of Scott’s other company, LCI.  The operative complaint alleges claims for (1) breach of oral promise, (2) fraud, (3) breach of written agreement, (4) breach of fiduciary duty, (5) derivative action for conversion, (6) derivative action for abuse of control, and (7) derivative action for corporate waste.  Only the claim for conversion is alleged against Traci. 

This hearing is on Traci’s motion for summary judgment or in the alternative for summary adjudication.  Traci argues that (1) Plaintiff cannot establish all elements of a conversion claim against Traci because Traci did not interfere with Plaintiff’s property; the intent element is not met, and damages are uncertain because Plaintiff cannot identify the amount of money allegedly taken by Traci; (2) Plaintiff’s claim for punitive damages fails as a matter of law because there is no clear and convincing evidence of malice, oppression or fraud on the part of Traci, and (3) Plaintiff is not entitled to attorneys’ fees because there is no contract between Traci and Plaintiff containing an attorneys’ fees provision.    

The Court notes that it has not considered Traci’s Reply Brief which was filed late on May 11, 2023 without leave to do so. Any reply brief was due by May 8, 2023. 

LEGAL STANDARD  

The function of a motion for summary judgment or adjudication is to allow a determination as to whether an opposing party cannot show evidentiary support for a pleading or claim and to enable an order of summary dismissal without the need for trial.  (Aguilar v. Atlantic Ritchfield Co. (2001) 25 Cal.4th 826, 843.)  Code Civ. Proc. §437c(c) “requires the trial judge to grant summary judgment if all the evidence submitted and ‘all inferences reasonably deducible from the evidence’ and uncontradicted by other inferences or evidence, show that there is no triable issue as to any material fact and that the moving party is entitled to judgment as a matter of law.” (Adler v. Minor Healthcare Corp. (1992) 7 Cal.App.4th 1110, 1119.)  “The function of the pleadings in a motion for summary judgment is to delimit the scope of the issues; the function of the affidavits or declarations is to disclose whether there is any triable issue of fact within the issues delimited by the pleadings.”  (Juge v. County of Sacramento (1993) 12 Cal.App.4th 59, 67).   

As to each claim as framed by the complaint, a defendant moving for summary judgment must satisfy the initial burden of proof by presenting facts to negate an essential element of the claim(s) or by establishing an affirmative defense.  (Code Civ. Proc. §437c(p)(2); Scalf v. D.B. Log Homes, Inc. (2005) 128 Cal.App.4th 1510, 1520.)  Courts “liberally construe the evidence in support of the party opposing summary judgment and resolve doubts concerning the evidence in favor of that party.”  (Dore v. Arnold Worldwide, Inc. (2006) 39 Cal.4th 384, 389.)  

Once the defendant has met its burden, the burden shifts to the plaintiff to show that a triable issue of one or more material facts exists as to that cause of action or a defense thereto.  (Id.)  To establish a triable issue of material fact, the party opposing the motion must produce substantial responsive evidence.  (Sangster v. Paetkau (1998) 68 Cal.App.4th 151, 166.) 

DISCUSSION 

Conversion 

Plaintiff’s lone claim against Traci is for conversion.  “Conversion is the wrongful exercise of dominion over the property of another.  The essential elements of a conversion claim are: (1) the plaintiff’s ownership or right to possession of the property, (2) the defendant’s conversion by a wrongful act or disposition of property rights, and (3) damages.”  (Lee v. Hanley (2015) 61 Cal.4th 1225, 1240.)  Traci argues there is no triable issue as to the second and third elements.    

A plaintiff must show some actual control or ownership by defendant over the property allegedly converted.  (Farmers Ins. Exchange v. Zerin (1997) 53 Cal.App.4th 445, 451.)  Traci argues she had no actual control or ownership of Plaintiff’s property because she was not a signatory or owner of the Account to which the property was transferred, and she did not own, manage or operate LCI, the owner of the Account.  (UMF Nos. 8-9, 13, 21, 24.)  But it is not necessary that “there be a manual taking of the property; it is only necessary to show an assumption of control or ownership over the property, or that the alleged converter has applied the property to his own use.” (Oakdale Village Group v. Fong (1996) 43 Cal. App. 4th 539, 543-544 (emphasis added).)  Here, there is a triable issue whether Traci applied Plaintiff’s funds for her own use.  Plaintiff points to Traci’s cashing of six checks, totaling nearly $3,600, from the Account where Plaintiff’s investment was deposited.  (RUMF No. 24; Ex. A to Hasic Decl.)         

Moreover, “the receipt of possession of converted goods by way of sale, pledge, gift, or otherwise with the intent to acquire a proprietary interest in the goods” constitutes “an act of conversion,” and “[t]his is true even where the person receiving possession acts innocently and in reasonable ignorance of the owner’s interest in the property.” (Regent Alliance Ltd. v. Rabizadeh (2014) 231 Cal. App. 4th 1177, 1182.)  Accordingly, “one receiving a chattel from a third person with intent to acquire a proprietary interest in it is liable without a demand for its return by the person entitled to possession, although he takes possession of the chattel without knowledge or reason to know that the third person has no power to transfer the proprietary interest.  The mere receipt of the possession of the goods under such circumstances is a conversion.” (Id. (citing Rest.2d Torts, § 229, com. e, p. 448).) 

There are recognized exceptions to the general rule of strict liability.  Some exceptions are based on circumstances in which “the person transferring possession may have the legal power to convey to a bona fide transferee a good title,” as, for example, when “a principal has clothed an agent in apparent authority exceeding that which was intended.” (Rabizadeh, 231 Cal.App.4th at 1183 (citations omitted).)  “Another exception concerns goods obtained by means of a fraudulent misrepresentation.  If the party who committed the fraud then sells the goods to a bona fide purchaser who takes for value and without notice of the fraud, then such purchaser gets good title to the chattel and may not be held for conversion (though the original converter may be).”  (Id. (citations and internal quotations omitted).)  Neither exception applies here as Traci does not claim she is a “bona fide purchaser” who “takes for value.”     

Accordingly, the Court concludes Traci has not met her burden of showing there is no triable issue she applied Plaintiff’s property for her own use, even though she was unaware of the circumstances under which the property was obtained or she did not even know it was Plaintiff’s property.    

Traci next argues that there is an intent element to a claim for conversion, and Plaintiff has not shown Traci “intended to exercise ownership over the alleged converted LLC funds.”  Traci misconstrues the law.  Conversion is a strict liability tort.  It does not require bad faith, knowledge, or even negligence; it requires only that the defendant have intentionally done the act depriving the plaintiff of his or her rightful possession.  (Voris v. Lampert (2019) 7 Cal.5th 1141, 1150; see also Moore v. Regents of University of California (1990) 51 Cal.3d 120, 144, fn. 38 (“The foundation for the action for conversion rests neither in the knowledge nor the intent of the defendant.”); Poggi v. Scott (1914) 167 Cal. 372, 375 (“[N]either good nor bad faith, neither care nor negligence, neither knowledge nor ignorance, are of the gist of [a conversion] action. . . . [T]he tort consists in the breach of what may be called an absolute duty.”).)  Thus, the fact that Traci did not know she was receiving property that was allegedly converted is of no consequence; so long as she intentionally took the property, that is sufficient for conversion.  Traci has not shown there is no triable issue she in fact intentionally took Plaintiff’s property.  She intentionally cashed checks from an account containing Plaintiff’s investment.  (RUMF No. 28; Ex. A to Hasic Decl.)     

Finally, Traci argues that the conversion claim against her fails because Plaintiff cannot identify the sum of money she allegedly took.  Money can be the subject of an action for conversion if a specific sum capable of identification is involved. (Weiss v. Marcus (1975) 51 Cal. App. 3d 590, 599.)  “A generalized claim for money [is] not actionable as conversion.”  (PCO Inc. v. Christensen, Miller, Fink, Jacobs, Glaser, Weil & Shapiro, LLP (2007) 150 Cal.App.4th 384, 395.)   

Here, Plaintiff has identified a specific sum of $3,569.66 that he claims Traci took.  (RUMF No. 30; Ex. A to Hasic Decl.)  Accordingly, Plaintiff has sufficiently alleged a conversion claim for money.  (Greenfield LLC v. Kandeel, 2017 Cal. Super. LEXIS 8000 at *13 (denying summary judgment on conversion claim where plaintiff identified a specific sum of money that was taken).) 

In sum, because Traci has not shown there is no triable issue, the Court denies summary adjudication of Plaintiff’s conversion claim against Traci.   

Punitive Damages  

Traci moves for summary adjudication of the punitive damages claim on the ground there is no clear and convincing evidence of malice, oppression or fraud on her part.  The Court agrees.       

Civil Code § 3294(a) authorizes the recovery of punitive damages in non-contract cases “where it is proven by clear and convincing evidence that the defendant has been guilty of oppression, fraud, or malice.  

(1) ‘Malice’ means conduct which is intended by the defendant to cause injury to the plaintiff or despicable conduct which is carried on by the defendant with a willful and conscious disregard of the rights or safety of others. 

(2) ‘Oppression’ means despicable conduct that subjects a person to cruel and unjust hardship in conscious disregard of that person’s rights. 

(3) ‘Fraud’ means an intentional misrepresentation, deceit, or concealment of a material fact known to the defendant with the intention on the party of the defendant of thereby depriving a person of property or legal rights or otherwise causing injury.”  

Civ. Code § 3294(c)(1)-(3). 

“Despicable conduct” that rises to the level of supporting an award of punitive damages against a defendant is that which is “so vile, base, contemptible, miserable, wretched or loathsome that it would be looked down upon and despised by ordinary decent people” and has been described as “conduct…having the character of outrage frequently associated with a crime.”  (Tomaselli v. Transamerica Ins. Co. (1994) 25 Cal.App.4th 1269, 1287.)   

“Conscious disregard” means “the defendant was aware of the probable dangerous consequences of his conduct, and that he willfully and deliberately failed to avoid those consequences.”  (Hoch v. Allied-Signal, Inc. (1994) 25 Cal.App.4th 1269, 1287.)  To be liable for punitive damages, the defendant must “have actual knowledge of the risk of harm it is creating, and in the face of the knowledge, fail to take steps it knows will reduce or eliminate the risk of harm.”  (Ehrhardt v. Brunswick, Inc. (1986) 186 Cal.App.3d 734, 742.) 

Punitive damages are appropriate if the defendant’s acts are reprehensible, fraudulent or in blatant violation of law or policy.  (American Airlines, Inc. v. Sheppard, Mullin, Richter & Hampton (2002) 96 Cal.App.4th 1017, 1051.)  “The mere carelessness or ignorance of the defendant does not justify the imposition of punitive damages.”  (Tomaselli, 25 Cal.App.4th at 1287.)  “Punitive damages are proper only when the tortious conduct rises to levels of extreme indifference to the plaintiff’s rights, a level which decent citizens should not have to tolerate.”  (Id.) 

Under the clear and convincing evidentiary standard, the evidence is “so clear as to leave no substantial doubt” and “sufficiently strong to command the unhesitating assent of every reasonable mind.”  (Shade Foods, Inc. v. Innovative Products Sales & Marketing, Inc. (2000) 78 Cal.App.4th 847, 891.)  Given the ultimate burden of proof of clear and convincing evidence, this standard must be taken into account when ruling on a motion for summary judgment or adjudication because it will be necessary for the evidence to meet the standard.  (American Airlines, 96 Cal.App.4th at 1049.)   

But even though the trial court takes this standard into account on a motion for summary judgment or adjudication, this does not impose a requirement for the plaintiff to “prove” the claim for punitive damages.  (Id.)  Summary judgment or adjudication of punitive damages is only proper “when no reasonable jury could find the plaintiff’s evidence to be clear and convincing proof of malice, fraud or oppression.”  (Johnson & Johnson v. Superior Court (2011) 192 Cal.App.4th 757, 762 (usually the question of whether the conduct supports an award of punitive damages is for the trier of fact because “the degree of punishment depends on the peculiar circumstances of each case”).) 

Here, the facts are as follows: Plaintiff’s $100,000 investment was deposited into the Account.  (UMF Nos. 18, 20.)  Traci was not the owner or a signatory to the Account.  (UMF No. 13.)  The Account belonged to LCI.  (UMF Nos. 18, 20.)  Traci did not own or operate LCI.  (UMF Nos. 8-9.)  Plaintiff’s $100,000 was to be invested in LLC.  (UMF No. 14.)  Traci was not a member or employee of LLC.  She never managed or operated the LLC.  (UMF No. 23-26.)  Traci claims she did not know where Plaintiff’s investment funds were deposited (UMF No. 21), while Plaintiff claims Traci was party to discussions where Plaintiff and her husband discussed where the investment was to be deposited which should have put her on inquiry notice as to the source of the funds she received from the Account (RUMF No. 21; Phillips Decl. ¶3).  Even accepting as true Plaintiff’s version of events, at best it shows mere carelessness or ignorance but not oppression, malice or fraud.  There is no showing that Traci had actual knowledge she was receiving Plaintiff’s funds; at best, Plaintiff claims the facts should have put Traci on inquiry notice.  On these facts, the Court cannot conclude there is a triable issue of malice, oppression or fraud, and accordingly, the Court grants summary adjudication on Plaintiff’s punitive damages claim against Traci.          

Attorneys’ Fees 

Traci also moves for summary adjudication of Plaintiff’s claim for attorneys’ fees on the ground there is no statute or contract entitling Plaintiff to such an award.  The Opposition does not address this argument.   

California follows the American rule which “provides that each party to a lawsuit must ordinarily pay his own attorney fees.”  (Trope v. Katz (1995) 11 Cal.4th 274, 278.)  The rule is codified in Code Civ. Proc. § 1021, which states: “Except as attorney’s fees are specifically provided by statute, the measure and mode of compensation of attorneys … is left to the agreement, express or implied, of the parties[.]” 

Plaintiff has not identified any statute entitling him to attorneys’ fees.  And there is no contract between the parties with an attorneys’ fees provision.  Accordingly, the Court grants summary adjudication of Plaintiff’s attorneys’ fees claim. 

CONCLUSION 

For the foregoing reasons, the Court GRANTS IN PART and DENIES IN PART Defendant Traci Honda LaFlower’s motion for summary judgment or summary adjudication.   

IT IS SO ORDERED. 

DATED: May 16, 2023 ___________________________  Edward B. Moreton, Jr.  Judge of the Superior Court