deny plaintiff's claim was made. Thus, the letter alone is insufficient to withstand defendant's motion for summary judgment. See Jones v. Philpott, 702 F. Supp. 1210, 1212, (W.D. Pa. 1989)("The presence of a mere scintilla of evidence in support of the non moving party's position is not sufficient to withstand the motion."). Without the letter, all plaintiff has is that defendant did not comply with the insurance contract. That alone does not prove an intent to violate defendant's insurance obligation at the time the renewal policy was issued. In Re Duo Metal & Iron Works, Inc., 45 Bankr. 139, 142 (Bankr. E.D. Pa. 1984). As such, summary judgment is granted for defendant with respect to plaintiff's claim of fraud.
Finally, defendant asserts that it is entitled to summary judgment on plaintiff's claim of conversion because it does not constitute conversion to accept payments which are obligated by contract. Therefore, defendant's act of accepting the insurance premiums cannot amount to conversion. On the other hand, plaintiff argues that Pennsylvania recognizes a cause of action for conversion where money is due under the terms of a contractual agreement. See Shonberger v. Oswell, 365 Pa. Super. 481, 530 A.2d 112 (1987).
Conversion occurs when a party deprives the owner from his right of or use of or possession of a chattel, without the owner's consent and without lawful justification. Shonberger v. Oswell, 365 Pa. Super. 481, 530 A.2d 112, 114 (1987). Courts do not require the actor to have specific intent, rather, any intent to assert dominion or control over the chattel that is inconsistent with the owner's right is sufficient. Id. Moreover, money can be the subject of conversion. Id. However, before money can be converted, it must belong to the plaintiff. Lee Tire and Rubber Co. v. Bonholtzer, 38 Del. Co. 331, 81 Pa. D. & C. 218, 221 (1951). Thus, an action for conversion will not lie where an alleged converter borrowed money, even though he had an intent not to pay back the loan. Id. Nor is there conversion when the money is collected to satisfy a debt. Id. On the other hand, if a plaintiff entrusts money or goods with the defendant, with the intent that the defendant sell or transfer the goods and give the proceeds to the plaintiff, and defendant keeps the proceeds or applies it to his own use, there has been conversion. Id.
The issue raised by the parties in this case presents a novel issue in Pennsylvania law. While plaintiff contends that Shonberger is applicable, the facts in Shonberger are distinguishable from the facts in the present case. In Shonberger, the plaintiff and defendant had entered into a consignment agreement whereby the defendant agreed to sell plaintiff's goods, keep a percentage for himself and remit the proceeds from the sale of goods to plaintiff. Eventually, defendant failed to give the proceeds to plaintiff. The court held that proceeds from the sale of goods could be the basis for a conversion action because they belonged to plaintiff, thus the court reversed and remanded the trial court's decision which had held in favor of defendant.
Unlike Shonberger, the present case does not involve the proceeds from a sale of goods wrongfully held by defendant. Plaintiff sets out two bases for his conversion action in his complaint. First, that by making the misrepresentations previously discussed, defendant "wrongfully has taken for itself money of the plaintiff in the form of premiums." Complaint, para. 34. Second, that "by refusing to pay the plaintiff the proceeds of the Policy, Federal wrongfully has retained for itself funds belonging to the plaintiff." Complaint, para. 33. Plaintiff's allegations technically turn on the issue of whether an insurance company that refuses to pay out a claim has converted the premiums. Thus, Shonberger is inapplicable because although a contract was involved in that case, the parties had specifically contracted that defendant was to pay plaintiff the proceeds of the sale of goods. Here, the contract provides for the payment of certain claims under specified circumstances. Thus, unlike in Shonberger, plaintiff's right to payment is not absolute.
After careful review of several cases in this jurisdiction and other jurisdictions, we find that plaintiff cannot bring a claim for conversion under the facts of this case. The easy issue revolves around plaintiff's first claim that conversion occurred by defendant accepting the payment of premiums.
The law is clear that there can be no conversion in this situation. Defendant was merely accepting money that was owed to it by virtue of the parties' agreement. In return, plaintiff received the insurance policy. As defendant correctly states in its motion (although defendant neglects to cite any cases to support its point), conversion does not occur when one is merely satisfying a debt. Lee Tire, 38 Del. Co. 331, 81 Pa. D. & C. 218, 221 (1951). See also Shahood v. Cavin, 154 Cal. App. 2d 745, 316 P.2d 700, 702 (1957) (Conversion does not occur "for money had and received for payment of debts, money being the subject of conversion only when it can be described or identified as a specific chattel.") Thus, merely accepting the payment of insurance premiums by plaintiff could not be the subject of conversion by defendant.
The other issue is whether defendant's refusal to pay proceeds on plaintiff's claim under the insurance contract for the stolen medals can be the subject of conversion. Under the facts of this case, we hold it cannot be the subject of conversion. First, while this question does not appear to have been addressed in Pennsylvania or this Circuit, the U.S. District Court for the Southern District of South Carolina has considered this precise issue. In Dawkins v. National Liberty Life Ins. Co., 263 F. Supp. 119 (D.S.C. 1967), the court was faced with deciding whether or not it had jurisdiction over the matter. The parties were from different states, however, plaintiff was claiming damages because defendant insurance company had refused to pay out benefits for plaintiff's claim, which amounted to $ 600.00. Plaintiff sought punitive damages in the amount of $ 500,000. Thus, the issue was whether the monetary amount to invoke jurisdiction had been satisfied. In a previous action, the court dismissed the case on the theory that punitive damages for breach of contract were not available, thus, plaintiff did not satisfy the jurisdictional requirement and should refile in state court. Dawkins v. National Liberty Life Ins. Co., 252 F. Supp. 800 (D.S.C. 1966).
In the second case, plaintiff had refiled in state court and the case was removed to the U.S. District Court. Defendant again moved to dismiss the case, and also to strike all references to punitive damages from plaintiff's complaint. Plaintiff's amended complaint however, added an allegation that defendant had converted the proceeds of the insurance policy by refusing to pay out plaintiff's claims. In holding that the new allegation was not sufficient for plaintiff to recover punitive damages, the court stated "To hold that an insurance company had willfully converted policy benefits to their own use by the same act of merely refusing to pay contested claims would overrule a long line of authorities that have held that such facts do not warrant the imposition of exemplary damages." Dawkins, 263 F. Supp. 119, 121 (D.S.C. 1967). The court continued to state that the facts did not warrant a finding of conversion, or a finding of conversion accompanying a fraudulent act to a breach of contract. Id. In so stating, the court recited the rule that conversion "will not lie to enforce a mere obligation to pay money." Id.; see also Belford Trucking Co. v. Zagar, 243 So. 2d 646, 648 (Fla. Dist. Ct. App. 1971). Further, to adopt this view "'would be equivalent to saying that every unpaid debt carries with it the implication of fraud on the part of the debtor; that the debtor has converted to his own use the money of another or that he has misappropriated that which was always his own.'" 263 F. Supp. at 121-22 (quoting Holland v. Spartanburg-Herald Journal Co., 166 S.C. 454, 165 S.E. 203 (1932)).
We find the Dawkin court's reasoning to be applicable here. In this case, plaintiff is merely alleging that, as in Dawkin, defendant has failed to satisfy its contractual obligation to pay out on plaintiff's insurance claim, a mere failure to pay a debt which is allegedly owed to plaintiff. This was not intended by the courts to constitute conversion. Moreover, other courts have firmly accepted the doctrine that an action for conversion will not lie where damages asserted are essentially damages for breach of contract. Misabec Mercantile, Inc. v. Donaldson, 853 F.2d 834, 838 (11th Cir. 1988); Transportes Aereos de Angola v. Ronair, Inc., 693 F. Supp. 102, 112 (D. Del. 1988) (applying Florida law); Hutton v. Klabal, 726 F. Supp. 67, 73 (S.D.N.Y. 1989). In Transportes, the court compared plaintiff's allegations in the complaint for breach of contract with the allegations for conversion, and concluded that they were essentially seeking damages for the same action, therefore, there could be no separate action for conversion.
The situation appears to be similar in this case. Plaintiff's claim of breach of contract by defendant's refusal to provide coverage for plaintiff's claim seeks compensatory damages for the full amount of the lost medals, plus interest, as well as the costs of attempts to locate the medals, costs of suit and attorney's fees. Plaintiff's claim for conversion seeks all of the above, plus punitive damages. Both claims seek injunctive relief for defendant to perform under the contract. The only other difference between the two claims is that plaintiff seeks an order directing defendant to hold all assets in a constructive trust for plaintiff under the conversion claim. However, given that there is no evidence of fraud or bad faith by defendant in this case, plaintiff's claim for punitive damages would fail because there is nothing left on which to base plaintiff's claim that defendant's act was "wanton, willful and outrageous." Complaint, para. 36. See Travelers Ins. Co., v. Swolsky, Civ. No. 91-7537, 1992 U.S. Dist. LEXIS 8408, at 6, (E.D.Pa. June 15, 1992) (punitive damages are available for conversion if plaintiff proves defendant's conduct was outrageous or recklessly indifferent to plaintiff's rights). As such, plaintiff's conversion claim merely amounts to a claim for breach of contract. Thus, for all of the above reasons, plaintiff's conversion claim must fail, and summary judgment in favor of defendant should be granted on Count III of the complaint.
In sum, there is no evidence of bad faith or fraud presented by plaintiff in this case, therefore, summary judgment in favor of defendant is granted on Counts II and IV of the complaint. Summary judgment is also granted with respect to plaintiff's claim for conversion (Count III) because there can be no conversion under the facts of this case. Finally, summary judgment is granted with respect to Count V (tortious interference with contract) pursuant to the parties' agreement. Only Count I (breach of contract) remains because there are genuine issues of material fact as to whether defendant had a valid reason for rescinding the contract. As such, summary judgment is denied with respect to Count I. An appropriate order follows.
AND NOW, this 2nd day of November, 1993, upon consideration of the motion of defendant, Federal Insurance Company, for summary judgment pursuant to Rule 56 of the Federal Rules of Civil Procedure, and all responses thereto, it is hereby ORDERED that defendant's motion is GRANTED with respect to Count II (Fraud), Count III (Conversion), Count IV (Bad Faith) and Count V (Tortious Interference) of plaintiff's complaint. It is further ORDERED that defendant's motion is DENIED with respect to Count I (breach of contract).
BY THE COURT:
J. Curtis Joyner, J.