Court Opinion

ID: 1017526
Source: CourtListenerOpinion
Date Created: 2013-07-04 22:06:17.190238+00
Date Added: 2024-06-11T09:13:55.322789
License: Public Domain

UNPUBLISHED

                    UNITED STATES COURT OF APPEALS
                        FOR THE FOURTH CIRCUIT

                               No. 04-2567

METALMECCANICA DEL TIBERINA,

                                                 Plaintiff - Appellant,

           versus

TIMOTHY S. KELLEHER, a/k/a and/or d/b/a
Kelleher and Company, LLC, d/b/a Clearing
International, LLC, d/b/a CNB International,
LLC,

                                                  Defendant - Appellee,

           and

KEVIN KELLEHER,

                                                              Defendant.

Appeal from the United States District Court for the District of
South Carolina, at Charleston. David C. Norton, District Judge.
(CA-02-279)

Argued:   September 21, 2005                 Decided:   November 4, 2005

Before WILKINSON and WILLIAMS, Circuit Judges, and Robert J.
CONRAD, Jr., United States District Judge for the Western District
of North Carolina, sitting by designation.

Affirmed by unpublished per curiam opinion.
ARGUED: Walter Thomas Grabowski, HOLLAND, BRADY & GRABOWSKI, P.C.,
Wilkes-Barre, Pennsylvania, for Appellant. Monica Lynn Thompson,
DLA PIPER RUDNICK GRAY CARY US, L.L.P., Chicago, Illinois, for
Appellee.   ON BRIEF: Bryson M. Geer, NELSON, MULLINS, RILEY &
SCARBOROUGH, L.L.P., Charleston, South Carolina, for Appellant.

Unpublished opinions are not binding precedent in this circuit.
See Local Rule 36(c).

                                2
PER CURIAM:

     Metalmeccanica Del Tiberina (Metalmeccanica) sued Timothy S.

Kelleher for conversion and unjust enrichment.                  After a jury

returned a verdict in favor of Metalmeccanica on its conversion

claim and against Metalmeccanica on its unjust enrichment claim,

the district court granted Kelleher’s motion for judgment as a

matter of law on the conversion claim and denied Metalmeccanica’s

motion to amend the judgment on the unjust enrichment claim.                 On

appeal,   Metalmeccanica         contends     that    the   record    contained

sufficient        evidence     for   a   reasonable    jury    to    find   that

Metalmeccanica had the right to the immediate return of its deposit

and, in the alternative, that the jury’s verdict in favor of

Metalmeccanica can be sustained on unjust enrichment grounds.               For

the reasons that follow, we disagree.

                                         I.

     Metalmeccanica is an Italian company that produces automobile

parts.       In     December    of   1998,    Metalmeccanica    entered     into

negotiations with CNB International, INC (CNB INC), which is owned

by Kelleher, for the purchase of four mechanical presses worth a

total contract value of $3.6 million combined.                The negotiations

resulted in an agreement directing Metalmeccanica to wire a 15%

down payment of $540,000 to the South Carolina account of another

company owned by Kelleher, CNB LLC. The agreement also directed

                                         3
Metalmeccanica to provide Clearing Niagara Bliss USA (Clearing),

yet another company owned by Kelleher, an irrevocable letter of

credit for the balance of the purchase price.

     Metalmeccanica wired the $540,000 to CNB LLC’s account, but

never provided Clearing with an acceptable letter of credit.

Immediately upon receipt of Metalmeccanica’s deposit, Kelleher

transferred it into his personal bank account and then into his

personal   brokerage     account.      Less       than    three    months    later,

relations began deteriorating between Metalmeccanica and Kelleher

and his companies.        Metalmeccanica raised concerns about the

quality of the construction of the presses when it learned the

presses would be built in Taiwan instead of the United States.                    CNB

INC filed for bankruptcy during that time, and Metalmeccanica

became concerned that CNB INC’s bankruptcy might interrupt the

presses’ manufacturing schedule.           As Metalmeccanica urged CNB LLC

for assurances on the quality of the presses and the timeliness of

the delivery, Kelleher continued to urge Metalmeccanica for the

letter   of   credit.      On    October     9,    1999,       Kelleher   informed

Metalmeccanica    that    he    was   cancelling         the   contract     due   to

Metalmeccanica’s failure to provide an acceptable letter of credit.

Kelleher retained Metalmeccanica’s deposit to cover CNB LLC’s

damages.

     Metalmeccanica initiated the present suit seeking the return

of its deposit. Metalmeccanica sued Kelleher personally on various

                                       4
grounds, including conversion and unjust enrichment.          The district

court directed a verdict in favor of Kelleher on all claims, except

the conversion and unjust enrichment claims. The parties tried the

remaining claims to a jury, which found in favor of Metalmeccanica

on the conversion theory and in favor of Kelleher on the unjust

enrichment theory.    Kelleher moved for judgment as a matter of law

on the conversion verdict, and Metalmeccanica moved to amend the

judgment on the unjust enrichment claim.

     The district court granted Kelleher’s motion for judgment as

a matter of law on the conversion claim because Metalmeccanica

failed to establish the elements of a conversion claim.                The

district court held that Metalmeccanica failed to demonstrate that

it had the immediate right to possess its deposit, an essential

element of conversion under South Carolina law. The district court

also denied Metalmeccanica’s motion to amend the judgment on the

unjust   enrichment    claim.   It       is   from   these   rulings   that

Metalmeccanica appeals.

     This case is properly in federal court because Metalmeccanica

is a foreign corporation organized under         Italian law and Kelleher

is a citizen of New York and the amount in controversy exceeds

$75,000. 28 U.S.C.A. § 1332 (West 1993). Venue is proper because a

substantial part of the contract negotiations occurred at CNB LLC’s

office in Charleston, South Carolina. We have jurisdiction to

                                     5
review the district court’s final order pursuant to 28 U.S.C.A. §

1291.

                                  II.

        On appeal, Metalmeccanica presents two arguments.    First, it

argues that the district court erred in granting Kelleher’s motion

for judgment as a matter of law on the conversion claim.       Second,

it argues in the alternative that the jury verdict in favor of

Metalmeccanica can be sustained on an unjust enrichment theory. We

begin by addressing the conversion claim.

                                 A.

     We review de novo the district court’s grant of judgment as a

matter of law.      Bonner v. Dawson, 404 F.3d 290, 293 (4th Cir.

2005).      In doing so, we view the evidence in the light most

favorable to the nonmoving party.       Myrick v. Prime Ins. Syndicate,

Inc., 395 F.3d 485, 489 (4th Cir. 2005).         “If a reasonable jury

could reach only one conclusion based on the evidence or if the

verdict in favor of [Metalmeccanica] would necessarily be based

upon speculation and conjecture,” the district court appropriately

granted Kelleher’s motion for judgment as a matter of law. Id.

        The parties agree that South Carolina substantive law applies

to the conversion claim.    South Carolina defines conversion as the

“unauthorized assumption and exercise of the right of ownership

                                   6
over goods or personal chattels belonging to another, to the

exclusion of the owner’s rights.”               Owens v. Andrews Bank & Trust

Co., 220 S.E.2d 116, 119 (S.C. 1975).              To prevail on a conversion

claim, the plaintiff must demonstrate “an immediate right to

possession at the time of conversion.”               Id. at 120 (quoting Am.

Jur. 2d Conversion § 54 (1965)). The defendant may defeat a

conversion claim by demonstrating “a legal right to the property.”

Mackela v. Bentley,       614 S.E.2d 648, 650 (S.C. Ct. App. 2005).

     On appeal, Metalmeccanica contends that because it did not

form a contract with Kelleher or any of his companies for the

purchase    of   the    presses,    Kelleher      converted     Metalmeccanica’s

deposit by removing it from CNB LLC’s account and placing it in his

personal account.       Even assuming there was no contract,1 there is

no dispute that at the intermediary stage of negotiations CNB LLC

requested    the       deposit     from       Metalmeccanica,     Metalmeccanica

voluntarily complied with the request, and CNB LLC, as a result,

accepted     Metalmeccanica’s        purchase        order.     By   so   doing,

Metalmeccanica lost the right to immediate possession of the money.

Because Metalmeccanica authorized CNB LLC’s assumption and exercise

     1
      The district court also aptly noted that Metalmeccanica’s
argument “is troubling because it would mean that [Metalmeccanica]
transferred over half a million dollars to CNB [LLC] before it had
contracted with CNB [LLC].     In other words it would mean that
[Metalmeccanica] paid CNB [LLC] before CNB [LLC] had obligated
itself to do anything in return for the money.” (J.A. 660-N, n.5.)
We nevertheless indulge in the assumption that no contract existed.

                                          7
of right of ownership over the deposit, CNB LLC could not have

converted the deposit. See Castell v. Stephenson Fin. Co., 135

S.E.2d 311, 313 (S.C. 1964)(“Since conversion is a wrongful act, it

cannot arise from the exercise of a legal right.”).       And because

CNB LLC properly held the deposit, Kelleher’s disposition of the

deposit pursuant to company policy could not render him personally

liable for conversion.2

     Metalmeccanica   contends   that   it   maintained   a   right   of

ownership over the deposit because Kelleher and his companies

deceived Metalmeccanica about key aspects of the transaction.         In

particular, Metalmeccanica argues that Kelleher and his companies

misrepresented which company was dealing with Metalmeccanica, where

the presses would be built, and when the first two presses would be

delivered.   Although courts have recognized that consent obtained

by misrepresentation can form the basis of a conversion action, the

alleged misrepresentations made by Kelleher’s companies fall far

     2
      It is important to note that Metalmeccanica sued only
Kelleher personally for conversion -- not any of his companies.
Thus, we must determine whether Metalmeccanica “presented enough
evidence for a reasonable jury to find that Kelleher himself
committed the tort of conversion against” Metalmeccanica. (J.A.
660-J.) Kelleher contends that the conversion claim cannot lie
against him because he is not personally liable for the debts of
his companies, unless or until Metalmeccanica successfully pierces
the corporate veil. Because we conclude that Metalmeccanica failed
to produce evidence to support a cause of action for conversion for
the reason noted in the text, we need not determine whether
Metalmeccanica properly sued Kelleher instead of his companies.

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short of this mark.        Austin v. Indep. Life & Acc. Ins. Co., 370

S.E.2d 918, 923 (S.C. Ct. App. 1988)(Goolsby, J., concurring).

      Even   viewing     the   facts    in    the    light      most    favorable    to

Metalmeccanica, as we must, we find no such misrepresentations.

The purchase order clearly stated that the construction of the

presses would be completed in Taiwan, that the first two presses

would   be   completed    in   July    1999,       and   that    CNB    LLC   was   the

contracting party.       CNB LLC’s failure to complete the construction

of the first two presses by July 1999 does not amount to a

misrepresentation because Metalmeccanica’s failure timely to supply

Clearing with the letter of credit meant that CNB LLC could not

secure the funds to build the presses.               The fault for the delayed

time schedule lies as much with Metalmeccanica as it does with CNB

LLC. Metalmeccanica has failed to demonstrate that Kelleher made

material     misrepresentations        that    induced       Metalmeccanica         into

voluntarily making the requested down payment.

        While Metalmeccanica’s arguments might have proved useful in

a breach of contract claim or perhaps an unfair trade practices

claim, Metalmeccanica has not demonstrated that it had an immediate

right to the possession of its deposit after voluntarily wiring it

to CNB LLC.       See Andrews Bank & Trust Co., 220 S.E.2d at 119

(“[T]here can be no conversion where there is a mere obligation to

pay a debt. Thus, where there is merely the relationship of debtor

and   creditor,    an    action   based       on    conversion         of   the   funds

                                         9
representing the debt is improper.”)(internal citation omitted).

The money received by CNB LLC was to be used for the design and

construction of mechanical presses and the fact that negotiations

between    the    parties      fell   apart      does   not   mean    that      Kelleher

converted the deposit.          To hold otherwise “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.”             Dawkins v. National Liberty Life

Ins. Co., 263 F. Supp. 119, 121-22 (D.S.C. 1967)(quoting Holland v.

Spartanburg-Herald       Journal       Co.,      165    S.E.2d   203,      208    (S.C.

1932))(interpreting South Carolina law).                  We therefore affirm the

district court’s grant of judgment as a matter of law to Kelleher

because no reasonable jury could find that Kelleher wrongfully held

Metalmeccanica’s deposit to the exclusion of Metalmeccanica as its

rightful owner.

                                           B.

     Having determined that the district court properly granted

Kelleher’s motion for judgment as a matter of law on the conversion

claim, we turn to Metalmeccanica’s argument that the jury verdict

should be sustained on an unjust enrichment theory. After the jury

returned   a     split   verdict,     finding       for   Metalmeccanica         on   the

conversion       claim   and     against        Metalmeccanica       on   the    unjust

                                           10
enrichment claim, Metalmeccanica moved to amend the judgment hoping

to reconcile the conflicting jury verdicts.                      The district court

denied Metalmeccanica’s motion finding that sufficient evidence

supported the jury’s verdict.              On appeal, Metalmeccanica argues

that even if it did not have the immediate right to possess its

deposit,    it   would     be    unjust        to    allow    Kelleher    to   retain

Metalmeccanica’s deposit.

     We     review   for        abuse     of        discretion     the    denial    of

Metalmeccanica’s     motion      to     amend       the   judgment.      E.E.O.C.   v.

Lockheed Martin Corp., 116 F.3d 110, 112 (4th Cir. 1997). Under

Rule 59(e) of the Federal Rules of Civil Procedure, a district

court may amend a judgment for three reasons:                    “(1) to accommodate

an intervening change in controlling law; (2) to account for new

evidence not available at trial; or (3) to correct a clear error of

law or prevent manifest injustice.”                 Id.    As the parties concede,

South Carolina substantive law applies to the unjust enrichment

claim.     In South Carolina, to recover for unjust enrichment the

plaintiff must show: “(1) that he conferred a non-gratuitous

benefit on the defendant; (2)that the defendant realized some value

from the benefit; and (3) that it would be inequitable for the

defendant to retain the benefit without paying the plaintiff for

its value.”      Sauner v. Pub. Serv. Auth. of S.C., 581 S.E.2d 161,

167 (S.C. 2003).

                                          11
     The district court did not commit a clear error of law by

concluding that the evidence could not support a finding that

Metalmeccanica      had   unjustly       enriched     Kelleher   because

Metalmeccanica failed to demonstrate that it conferred a non-

gratuitous benefit on Kelleher.           At most, Metalmeccanica can

demonstrate that CNB LLC, as opposed to Kelleher, received a non-

gratuitous    benefit.    Any   benefit    Kelleher   received   via   the

voluntary transfer from CNB LLC’s account came from CNB LLC – not

Metalmeccanica.     While Metalmeccanica may have had an unjust

enrichment claim against CNB LLC3; Metalmeccanica expressly stated

it is not attempting to pierce the corporate veil. Accordingly, we

affirm the district court.

                                  III.

     In summary, we affirm the district court’s grant of judgment

as a matter of law to Kelleher on the conversion claim because

Metalmeccanica did not have the immediate right to possession of

its deposit after voluntarily transferring the money to CNB LLC’s

account.     We also find that the jury verdict cannot be sustained

     3
      It is by no means a foregone conclusion that Metalmeccanica
would have prevailed on such a claim. Kelleher presented evidence
that Metalmeccanica’s failure to provide an acceptable letter of
credit and the subsequent cancellation of the order cost Kelleher’s
companies close to $850,000.     Kelleher also testified that if
Metalmeccanica had named Kelleher’s companies as co-defendants, the
companies would have counterclaimed for the additional damages.

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under an unjust enrichment theory because Metalmeccanica conferred

no non-gratuitous benefit on Kelleher.

                                                         AFFIRMED

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