Opinion ID: 219939
Heading Depth: 2
Heading Rank: 2

Heading: Criminal Conversion

Text: Smeigh also brings a claim for criminal conversion against JM. To succeed, Smeigh has to show that JM knowingly or intentionally exert[ed] unauthorized control over his property. Ind.Code § 35-43-4-3(a). A person engages in conduct `knowingly' if, when he engages in the conduct, he is aware of a high probability that he is doing so. Id. § 35-41-2-2(b). A person's control over property of another person is unauthorized if it is exerted in a manner or to an extent other than that to which the other person has consented. Id. § 35-43-4-1(b)(2). A person who has suffered a pecuniary loss as a result of a criminal conversion may bring a civil action to recover the loss. JET Credit Union v. Loudermilk, 879 N.E.2d 594, 597 (Ind.Ct.App.2008). A claimant in a civil action must only show that the defendant committed the criminal act by a preponderance of the evidence. French-Tex Cleaners, Inc. v. Cafaro Co., 893 N.E.2d 1156, 1166 (Ind.Ct.App.2008). Smeigh must prove all the elements of the alleged criminal act. Id. at 1166. Criminal intent is an essential element of criminal conversion. Id. It is this mens rea requirement that differentiates criminal conversion from a more innocent breach of contract or failure to pay a debt, which situations the criminal conversion statute was not intended to cover. Id. at 1168 (finding no conversion where the defendant acted in accordance with reasonable interpretation of an ambiguous contract); NationsCredit Commercial Corp. v. Grauel Enters., Inc., 703 N.E.2d 1072, 1079 (Ind.Ct.App.1998) (same). A defendant's reasonable belief that she controlled or continued to control property with the owner's consent defeats the mens rea element of conversion. Whitlock v. Brown, 596 F.3d 406, 413 (7th Cir.2010). If the mens rea element exists, even a temporary deprivation of property is sufficient to succeed under the statute. Id. [2] There is no evidence in the record that Wilson's control over Smeigh's property was unauthorized or even if it was unauthorized, that she was aware of a high probability that her control was unauthorized. Smeigh acknowledged that it was company protocol to sort through a terminated employee's belongings to separate personal property from company property. He was aware that Wilson was going to take his property and separate his tools from JM's tools; yet, he never objected. Smeigh inquired about his property, and Wilson told him that she still needed to go through his tools. The record doesn't suggest that Smeigh demanded the immediate return of his tools [3] or gave Wilson any indication that her temporary possession of them was unauthorized. A week later, Wilson informed Smeigh that they had been stolen from her office. She offered to replace them, but then Smeigh never heard from her. Although a demand for return is not itself an element of criminal conversion, Lambert v. Yellowbird, Inc., 496 N.E.2d 406, 409-10 (Ind.Ct.App.1986), Smeigh had to present evidence to raise a reasonable inference that Wilson was aware that her possession was unauthorized. He failed to do so. More importantly, there is no evidence that JM was aware that Wilson still had Smeigh's tools or that her continued possession of them was unauthorized. Wilson is not part of JM management; she is an hourly employee. Smeigh testified that he didn't raise the issue of his personal property when he was terminated because he assumed that [he] would be getting [his] job back after the grievance process, after it went to arbitration. After that day, Smeigh never inquired with a JM manager about the return of his property. An employer can be held liable for conversion as a result of its employee's actions under the doctrine of respondeat superior. A company may be convicted of an offense... if it is proved that the offense was committed by its agent acting within the scope of his authority. Ind.Code § 35-41-2-3. This section creates a statutory version of respondeat superior pursuant to which principals are liable for offenses committed by an agent acting within the scope of his authority. Tippecanoe Beverages, Inc. v. S.A. El Aguila Brewing Co., 833 F.2d 633, 637 (7th Cir. 1987). Oddly, Smeigh didn't raise an argument of vicarious liability at the district court, even though it was addressed by JM in its summary judgment brief. At oral argument, Smeigh acknowledged that he didn't raise vicarious liability below and wasn't raising it on appeal. Smeigh therefore has waived this argument. As the district court stated, Without a vicarious liability hook or evidence to establish criminal intent, Smeigh's conversion claim fails. Smeigh v. Johns Manville, Inc., No. 1:09-cv-0414, 2010 WL 3781492, at  (S.D.Ind. Sept. 2, 2010). We similarly conclude that Smeigh, who arguably may have had a claim arising in negligence for the loss of his property, see Kottlowski v. Bridgestone/Firestone, Inc., 670 N.E.2d 78, 82-84 (Ind.Ct.App.1996) (finding genuine issue of material fact on bailment claim where employees left their tools at employer's premises and they were stolen), cannot make out a claim for criminal conversion. JM contends that Smeigh's conversion claim is frivolous and seeks sanctions pursuant to Rule 38 of the Federal Rules of Appellate Procedure. We agree that his claim is frivolous, but for the reasons stated below, we decline to award monetary damages to JM. Rule 38 states: If a court of appeals determines that an appeal is frivolous, it may, after a separately filed motion or notice from the court and reasonable opportunity to respond, award just damages and single or double costs to the appellee. Fed. R.App. P. 38. [4] Under Rule 38, we must first determine if the appeal is frivolous, and if we find it is, we have discretion to award sanctions or decline to do so. In re Bagdade, 334 F.3d 568, 581 (7th Cir.2003). An appeal is frivolous when the result is obvious or when the appellant's argument is wholly without merit. Grove Fresh Distribs., Inc. v. John Labatt, Ltd., 299 F.3d 635, 642 (7th Cir.2002) (quotations omitted). Pursuing a frivolous appeal invites sanctions, including just damages, which we may impose in our considered discretion. Id. Sanctions are appropriate if the appellant merely restates arguments properly rejected by the district court that are unsupported by a reasoned colorable argument for altering the district court's judgment. Perry v. Pogemiller, 16 F.3d 138, 140 (7th Cir.1993). We have held that the combination of frivolous legal arguments ... and frivolous factual arguments may warrant sanctions. In re Bagdade, 334 F.3d at 581 (citation omitted). Smeigh did not address any of the district court's well-reasoned explanations for dismissing his conversion claim. His argument at the district court and on appeal spans less than one page and is wholly undeveloped. Rather than restructuring his argument to demonstrate that the district court's decision was in error, he instead cut and pasted his summary judgment argument into his appellate briefa tactic which could not hope to succeed on appeal. See Bagdade, 334 F.3d at 582. The district court pointed out a significant flaw in Smeigh's claimhe didn't make any argument that JM could be held liable for the actions of its employee. The district court also noted that Smeigh's factual assertion that he had demanded the return of his property from JM was unsupported by the record. Even though the district court pointed out that his claim was hopeless, Smeigh persisted in pursuing it on appeal, making the same (nearly verbatim) frivolous arguments. See e.g., Perry, 16 F.3d at 140 (issuing sanctions when appellant offered no valid legal support for his position on appeal other than that properly rejected by the district court). Smeigh's counsel responded at oral argument that our review is de novo and he can raise the same arguments to this court as below and isn't permitted to raise new arguments. Although true, he certainly could have explained why the district court's decision was erroneousfor example, he could have explained how Smeigh can succeed without asserting vicarious liabilityor, if he has no explanation, he could have decided not to appeal his conversion claim. Rule 38 is permissive; we may decline to impose sanctions even if the appeal is frivolous. Indep. Lift Truck Builders Union v. Nacco Materials Handling Group, 202 F.3d 965, 969 (7th Cir. 2000) (quotations omitted). How we exercise [our] discretion may turn on our perception of whether an appellant acted in bad faith. Berwick Grain Co., Inc. v. Ill. Dep't of Agric., 217 F.3d 502, 505 (7th Cir.2000). We find that this case is too close to the line to warrant monetary sanctions. See Ross v. RJM Acquisitions Funding LLC, 480 F.3d 493, 499 (7th Cir. 2007) (sanctions not imposed but attorney warned that he was skating near the edge of his pond). Smeigh raised a non-frivolous argument (retaliatory discharge) on appeal, and JM had to expend only minimal effort in responding to Smeigh's frivolous conversion claim. We nonetheless admonish counsel for appellant, Joel S. Paul, that this portion of his appeal does not meet our standards for presenting and developing arguments on appeal.