UNITED STATES DISTRICT COURT

NORTHERN DISTRICT OF INDIANA

FORT WAYNE DIVISION

DUMISANI MLUNGWANA, )

)

Plaintiff, )

)

v. ) Case No.: 1:14-CV-339

)

COVENANT CARE MARION LLC, )

)

Defendant. )

MEMORANDUM OF DECISION AND ORDER

This matter is before the court on the motion to dismiss filed by Defendant Covenant

Care Marion LLC (“Affirma”). [DE 12.] Affirma filed a brief in support of its motion on that 1

same date. [DE 13.] Defendant seeks dismissal of Count II of Plaintiff’s complaint. Plaintiff

Dumisani Mlungwana filed a response in opposition to the motion [DE 17] and Affirma filed a

reply brief. [DE 18.] For the reasons discussed below, Defendant’s motion to dismiss Count II of

Plaintiff’s complaint is GRANTED. Counts I, III, IV, and V of the complaint are not affected by

this Order and remain pending.

FACTUAL BACKGROUND

Mlungwana was employed by Affirma “as a PRN (as needed) registered occupational

therapist (OTR) from July 2011 until March 11, 2012.” (Complaint, p. 2, ¶ 6.). “Thereafter, he

was employed by [Affirma] as a regular full time registered occupational therapist (OTR) until

March 12, 2014, when his employment was terminated.” (Complaint, p. 2, ¶ 7.). Mlungwana

states that “[t]hroughout the last year of his employment, from March 2013, [Affirma] paid

 In its corporate disclosure statement filed pursuant to Fed.R.Civ.P. 7.1 [DE 11], Defendant 1

states that its corporate name is “Affirma Rehabilitation, Inc., d/b/a Marion Rehabilitation &

Assisted Living.” Defendant refers to itself as Affirma in its pleadings and the court will do the

same.

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[him] at the rate of $40.00 per hour for each hour he worked, up to 40 hours per week.”

(Complaint, p. 2, ¶ 8.). Mlungwana contends, however, that he worked an average of 55 hours

per week during that last year. (Complaint, p. 2, ¶ 9.). He claims that he was paid $40.00 per

hour for the first 40 hours that he worked each week, but received nothing for the hours that he

worked in excess of 40 per week. (Complaint, p. 2, ¶ 10.). Mlungwana asserts that [Affirma]

failed to pay him for the overtime that he worked. (Complaint, p. 2, ¶ 11.). Based on those

allegations, Mlungwana filed this lawsuit and asserts claims against Affirma “for unpaid

overtime pursuant to the Fair Labor Standards Act (“FLSA), 29 U.S.C. 207 and 213, unpaid

wages pursuant to Indiana Code 22-2-5-2, 34-24-3, 22-2-9-2, and conversion, breach of implied

contract, and unjust enrichment under Indiana common law.” (Complaint, p. 1, ¶ 1). Count II of

the complaint, the state law claim for conversion, is the only count at issue in Affirma’s motion

to dismiss.

STANDARD OF REVIEW

When considering a motion to dismiss pursuant to Federal Rule of Civil Procedure

12(b)(6), a court presumes all well-pleaded allegations to be true, views them in the light most

favorable to the plaintiff, and accepts as true all reasonable inferences to be drawn from the

allegations. Whirlpool Fin. Corp. v. GN Holdings, Inc., 67 F.3d 605, 608 (7th Cir. 1995). The

Supreme Court has articulated the following standard regarding factual allegations that are

required to survive dismissal:

While a complaint attacked by a Rule 12(b)(6) motion to dismiss does not need

detailed factual allegations, . . . a plaintiff's obligation to provide the “grounds” of

his “entitlement to relief” requires more than labels and conclusions, and a

formulaic recitation of the elements of a cause of action will not do. . . . Factual

allegations must be enough to raise a right to relief above the speculative level, . .

. on the assumption that all the allegations in the complaint are true (even if

doubtful in fact).

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Bell Atl. Corp. v. Twombly, 550 U.S. 544, 555 (2007) (internal citations omitted). A complaint

must contain sufficient factual matter to “state a claim that is plausible on its face.” Id. at 547.

“A claim has facial plausibility when the plaintiff pleads factual content that allows the court to

draw the reasonable inference that the defendant is liable for the misconduct alleged.” Ashcroft

v. Iqbal, 556 U.S. 662, 678 (2009) (citing Twombly, 550 U.S. at 556).

Although the court must accept as true all well-pleaded facts and draw all permissible

inferences in the Plaintiff's favor, it need not accept as true “threadbare recitals of a cause of

action’s elements, supported by mere conclusory statements. . .” Id. Legal conclusions can

provide a complaint’s framework, but unless well-pleaded factual allegations move the claims

“from conceivable to plausible,” they are insufficient to state a claim. Id. at 683 (quoting

Twombly, 550 U.S. at 570).

DISCUSSION

The parties do not dispute the applicable Indiana law regarding conversion (although they

certainly debate its application to the facts of this case). Affirma summarized that law in its

memorandum as follows:

Conversion requires the knowing or intentional exertion of unauthorized control

over the personal property of another. Ind. Code § 35-43-4-3(a) (emphasis

added); see also Huff v. Biomet, Inc., 654 N.E.2d 830, 835 (Ind.Ct.App. 1995)

overruled on other grounds; Stevens v. Butler, 639 N.E.2d 662, 666 (Ind.Ct.App.

1994), trans. denied. Money is subject to conversion only if it is a “special

chattel.” A “special chattel” is “a determinative sum with which the defendant

was entrusted to apply to a certain purpose.” Huff, 654 N.E.2d at 835-36 (citing

Stevens, 639 N.E.2d at 666). Failure to pay a debt does not constitute criminal

conversion. Id. at 836 (citing National Fleet Supply, Inc. v. Fairchild, 450 N.E.2d

1015, 1019 (Ind.Ct.App. 1983)).

Def’s. Mem., p. 3.

Affirma asks this court to dismiss Mlungwana’s conversion claim because, it argues, it

did not exercise control over property belonging to the Plaintiff, a necessary element in

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establishing a prima facie case of conversion under Indiana law. Affirma argues that its “alleged

failure to distribute the correct amount of its money to Mlungwana for services he performed

does not constitute conversion.” Id., p. 1 (italics in original). According to Affirma,

“Mlungwana’s conversion claim is about Affirma’s money, not Mlungwana’s. . . . Mlungwana

cannot maintain his conversion claim without evidence that Affirma retained his personal

property.” Id., p. 4 (italics in original). 

Affirma contends that the cases it cites in support of its argument are on point and

establish as a matter of law that money allegedly owed as wages does not constitute a “special

chattel” and, therefore, cannot be the subject of a conversion claim. 

For example, in Huff v. Biomet Inc., supra, the court held that a “special chattel” is “a

determinate sum with which the defendant was entrusted to apply to a certain purpose.” Huff,

654 N.E.2d at 835-36 (citing Stevens, 639 N.E.2d at 666). Failure to pay a debt does not

constitute criminal conversion. Id. at 836 (citing National Fleet Supply, 450 N.E.2d at 1019).

Furthermore, “a plaintiff must allege sufficient facts to ‘allow the Court to draw the reasonable

inference that the Plaintiff [] entrusted determinable sums of money to the Defendants to apply

for a certain purpose.’” Foster v. W-Transfer, Inc., 2012 WL 2376188 at *1 (S.D.Ind. June 22,

2012) (quoting Puma v. Hall, 2009 WL 5068629 at *4 (S.D. Ind. Dec. 17, 2009)).2

Indeed, the cases cited by Affirma support the company’s position. See National Fleet

Supply, 450 N.E.2d at 1019 (failure to pay a debt is not conversion under Indiana law); Huff, 654

N.E.2d at 836 (employer did not commit criminal conversion when it wrongfully withheld

In Puma, the plaintiffs were mortgage loan officers who brought suit for unpaid wages and 2

asserted claims under the Fair Labor Standards Act and various state statutes. They also alleged

that defendants were liable for conversion for failure to pay those wages. The court rejected the

conversion claim, holding that “. . . under Indiana law the failure to pay an indebted sum of

money does not constitute conversion.” Puma, 2012 WL 5068629, at *4 (citing Tobin v. Ruman,

819 N.E.2d 78, 89 (Ind.Ct.App. 2004)).

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commission payments from employee); Puma, 2012 WL 5068629, supra, n. 2; Tobin, 819

N.E.2d at 89 (employer did not commit conversion by wrongfully withholding retained earnings

because withholding was, at most, a failure to pay a debt). 

In its reply brief, Affirma cites yet another case from the Southern District of Indiana that

addressed a conversion claim based on unpaid compensation. In Dunlap v. Switchboard

Apparatus, Inc., 2012 WL 1712554 (S.D.Ind. May 15, 2012) the plaintiffs alleged that they were

not paid for engineering services they performed for defendants. They brought several claims

against defendants, including a claim for conversion. The court rejected the conversion claim

and held that “. . . Indiana law is settled that failure to pay a debt ‘does not constitute conversion

as a matter of law’ Puma v. Hall, 2009 WL 5068629, at *4 (S.D.Ind. Dec.17, 2009); see also

Tobin v. Ruman, 819 N.E.2d 78, 89 (Ind.Ct.App. 2004) (wrongful withholding of retained

earnings is, at most, a failure to pay a debt, which does not constitute conversion as a matter of

law).”

Id. at *9. The Dunlap holding, then, is also in line with Huff, Tobin, Foster, and Puma.

Affirma contends that Mlungwana’s conversion claim “boils down to the same allegation

the courts rejected in Dunlap, Puma, and Tobin--the defendant committed conversion because it

failed to pay for services performed.” Def.’s Reply, p. 2. “Mlungwana’s conversion claim fails

as a matter of law because Indiana law does not recognize a claim for conversion when the

employer’s conduct amounts to nothing more than a failure to pay a debt or withholding of

plaintiff’s earnings.” Id. (citing National Fleet, Huff, Puma, and Tobin).

In his response, Mlungwana argues that the cases on which Affirma relies are not on

point and “can be materially distinguished from the instant case.” Pltf.’s Resp., p. 3. Mlungwana

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argues, for example, that Affirma’s reliance on the Tobin case is misplaced. The plaintiff in

Tobin, a lawyer who separated from the defendant law firm, brought a conversion claim (among

others, including a claim under the Wage Payment Act) against the firm alleging that the firm

failed to pay him a bonus that was due. Instead of directly paying Tobin the bonus, it became

part of his minority interest in the firm. Mlungwana contends that the Tobin case stands only for

the proposition that “‘[b]ecause there was no violation of the Wage Payment Act, Tobin is

ineligible for treble damages and attorney fees.’” Pltf.’s Resp., p. 3 (quoting Tobin, 819 N.E.2d

at 88). Mlungwana argues that “[u]nlike Tobin, who was compensated with a bonus that was set

over to his equity interest in the firm, Mlungwana has never been compensated in any form for

the overtime wages that he earned and entrusted to Defendant until payday.” Id., p. 4

(underlining in original). 

In its reply brief, Affirma asserts that “Mlungwana incorrectly argues Tobin is

inapplicable because he focuses on the Tobin court’s analysis of Count II of Tobin’s amended

complaint.” Def.’s Reply, p. 3. In Count II, Tobin asserted claims for breach of contract and

violation of the Wage Payment Act, alleging that the defendant was liable for treble damages

and attorneys’ fees for failing to pay Tobin a bonus he claimed he was entitled to. Affirma states

that “[t]he Tobin court’s analysis of the Wage Payment Act and breach of contract claims is

irrelevant to this court’s determination of the viability of Mlungwana’s conversion claim. What

matters here is the Tobin court’s analysis of Tobin’s conversion claim (Count III of Tobin’s

amended complaint). That analysis is directly applicable to evaluation of Mlungwana’s

conversion claim. Tobin, like Mlungwana, alleged his employer committed conversion because

it wrongfully withheld money it owed him.” Id. 

In fact, in Tobin, the court addressed the plaintiff’s conversion claim and held as follows:

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As to whether or not [defendant] committed criminal conversion, [defendant]

argue[s] that any failure to pay Tobin his share of the retained earnings is, at

most, the failure to pay a debt, which does not constitute criminal conversion as a

matter of law. We agree. Tobin has not shown that he entrusted money to

[defendant] for any particular purpose; to the contrary, the funds at issue are and

always have been in the possession of and generated by [defendant].

[Defendant’s] wrongful withholding of these funds from Tobin is, at most, the

failure to pay a debt, which does not constitute criminal conversion as a matter of

law.

Tobin, 819 N.E.2d at 89 (citing Huff, 654 N.E.2d at 836). This court agrees that Mlungwana’s

application of Tobin is misplaced. The holding in Tobin regarding the plaintiff’s conversion

claim is in line with Huff, National Fleet, Foster, Puma, and Dunlap. In all of those cases, as

discussed above, the courts held that a claim for unpaid wages cannot be the basis for a

conversion claim.

Affirma contends that “[t]he similarity between Mlungwana’s claim and Tobin’s claim

requires application of the Tobin decision.” Def.’s Reply, pp. 3-4. “Indiana courts simply do not

recognize a claim for conversion based on failure to pay for services rendered. Like the

unsuccessful plaintiffs in Dunlap, Tobin, Puma, and Huff, Mlungwana alleges conversion

because at most, Affirma withheld money and failed to compensate him for services he

performed. Affirma’s conduct does not constitute conversion under Indiana law even if the

amount at issue is determinable and the plaintiff’s entitlement to the money is not in question.”

Id. (citing Tobin, 819 N.E.2d at 89). 

Mlungwana also attempts to distinguish Foster v. W-Transfer, supra, and states that “[i]n

Foster, plaintiff failed to satisfy the ‘entrustment’ element of conversion . . . [because] the wages

due the plaintiff were not transferred directly from defendant employer to plaintiff employee;

instead, the wages were first directed to a third-party, in this case, the State, thereby obviously

precluding a finding that [plaintiff] entrusted the wages to [defendant].” Id. But, Mlungwana

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says, in the present case no such third party was involved and “Mlungwana did entrust his earned

overtime wages directly to Defendant . . . .” Id.

In Foster, the plaintiff was a teamster and defendant, W-Transfer, was a private trucking

company that occasionally leased its employees to the state or state agencies to provide services

on public works projects. Foster, 2012 WL 2376188 at *1 (S.D.Ind. June 22, 2012). Plaintiff

contended that he was owed wages for work he did on such projects and that W-Transfer’s

failure to pay him those wages constituted conversion under Indiana law. The court rejected

Foster’s conversion claim, based primarily on the fact that Foster could not establish that the

wages he claimed he was owed constitute a “special chattel.” The court explained as follows:

The case law is clear that a plaintiff must allege sufficient facts to “allow the

Court to draw the reasonable inference that the Plaintiff [ ] entrusted determinable

sums of money to the Defendants to apply for a certain purpose.” . . . In order to

satisfy the “entrustment” element, the money at issue must be the plaintiff’s own,

whereas here, the funds of a third party, namely, the State’s, are those being

entrusted to reimburse contractors for wages to be paid to their employees.

Compare Roake [v. Christensen], 528 N.E.2d [789,] 791 [Ind. Ct. App. 1988]

(finding conversion where an employer allowed a health care insurance policy to

lapse while continuing to accept checks to pay for it from an employee), with

Tobin, 819 N.E.2d at 89 (holding that failure of an employer to pay employee

retained earnings is at most failure to pay a debt). As to the “determinant sum”

element, State funds for public works projects are not earmarked for payment of

each employee, but are part of a larger heterogeneous pool that can be held until

the contractor pays his debts. . . . Because these funds are co-mingled they cannot

be considered a determinant sum, thereby precluding the classification of money

as a special chattel under these facts.

Id. at *4 (additional internal citations and footnote omitted).

So while it is true that the decision in Foster turned largely on the fact that the funds

earmarked to pay plaintiff were entrusted to a third party, it is also true that the court in Foster

recognized that the reasoning and holding in Tobin precluded plaintiff’s claim for conversion.

Having reviewed the parties’ briefs and the applicable law, this court concludes that

Affirma’s argument for dismissal is well taken. While Mlungwana makes a gallant effort to

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demonstrate that the cases on which Affirma relies are factually distinguishable from this case,

he ultimately succeeds only in making distinctions without a difference. Mlungwana has failed

to state a claim for conversion against Affirma, even when all of his factual assertions are taken

as true, since his assertions fail to establish the elements of that cause of action. Accordingly, his

claim must be dismissed pursuant to Fed.R.Civ.P. 12(b)(6).

CONCLUSION

For the reasons discussed above, Defendant’s Motion to Dismiss Plaintiff’s Conversion

Claim [DE 12] is hereby GRANTED and Count II of Plaintiff’s complaint is DISMISSED.

Counts I, III, IV, and V of the complaint are not affected by this Opinion and Order and remain

pending.

Entered: April 13, 2015.

 s/ William C. Lee 

 William C. Lee, Judge

 United States District Court

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