Aroma Wines & Equip., Inc. v. Columbian Distribution Servs., Inc., Docket Nos. 148907

• Decision Date: 17 June 2015
• Docket Number: 148909.,Calendar No. 1.,Docket Nos. 148907
• Citation: 497 Mich. 337,871 N.W.2d 136
• Parties: AROMA WINES & EQUIPMENT, INC v. COLUMBIAN DISTRIBUTION SERVICES, INC.
• Court: Michigan Supreme Court

497 Mich. 337

871 N.W.2d 136

AROMA WINES & EQUIPMENT, INC

v.COLUMBIAN DISTRIBUTION SERVICES, INC.

Docket Nos. 148907

148909.

Calendar No. 1.

Supreme Court of Michigan.

Argued March 10, 2015.

Decided June 17, 2015.

Visser and Associates, PLLC (by Donald R. Visser, Grand Rapids and Rebecca J. Baker), for Aroma Wines & Equipment, Inc.

Varnum LLP (by Jon M. Bylsma, Conor B. Dugan, and Jeffrey D. Koelzer, Grand Rapids), and Kuiper Orlebeke PC, Grand Rapids, (by Thomas A. Kuiper ) for Columbian Distribution Services, Inc.

MARY BETH KELLY, J.

By 2005 PA 44, the Legislature amended MCL 600.2919a(1)(a) to create a cause of action against someone "converting property to [that] person's own use." In this case, we consider whether this statutory language is coextensive with the common-law tort of conversion or, if not, what additional conduct is required to show that a defendant converted property to his, her, or its "own use."

We hold that "converting property to [that] person's own use," as used in MCL 600.2919a, is not coextensive with common-law conversion. By enacting MCL 600.2919a, the Legislature intended to create a separate statutory cause of action for conversion "in addition to any other right or remedy" a victim of conversion could obtain at common law.¹ In this case, defendant argues that conversion "to the other person's own use" requires a showing that the other person used the converted property for the property's common or intended purpose. We decline to adopt such a narrow interpretation of "own use." Rather, we hold that the separate statutory cause of action for conversion "to the other person's own use" under MCL 600.2919a(1)(a) requires a showing that the defendant employed the converted property for some purpose personal to the defendant's interests, even if that purpose is not the object's ordinarily intended purpose.

In this case, plaintiff proffered evidence at trial that would allow the jury to conclude that defendant used the wine for some purpose personal to defendant's interests. As a result, the circuit court erred by granting defendant's motion for directed verdict on this claim. We affirm the judgment of the Court of Appeals and remand this case to the Kent Circuit Court for further proceedings consistent with this opinion.

I. FACTS AND PROCEDURAL HISTORY

Plaintiff, Aroma Wines & Equipment, Inc., is a wholesale wine importer and distributor. Defendant, Columbian Distribution Services, Inc., operates warehouses in Michigan. Starting in 2006, Aroma agreed to rent some of Columbian's climate-controlled warehouse space to store its wine while awaiting sale.² According to the parties' agreement, Columbian was required to maintain the wine within a temperature range of 50 to 65 degrees Fahrenheit. While the agreement required Columbian to provide Aroma with notice before Columbian could transport Aroma's wine to a different warehouse complex, Columbian reserved the right under the agreement to move the wine without notice "within and between any one or more of the warehouse buildings which comprise the warehouse complex" identified in the agreement.

Aroma's sales declined sharply during 2008, and Aroma began falling behind on its monthly payments to Columbian. In January 2009, Columbian notified Aroma that it was asserting a lien on Aroma's wine and that Aroma could not pick up any more wine or ship any more orders until past due invoices were paid. In March 2009, Columbian released to Aroma a small portion of its wine in exchange for a $1,000 payment on Aroma's account. Notwithstanding this payment, Columbian asserted that Aroma had accrued a past-due balance of more than $20,000 on the account.

At some point during this dispute, and contrary to the terms of the contract, Columbian removed the wine from its climate-controlled space and transported it to an uncontrolled environment.³ Aroma alleges that Columbian moved its wine to rent the space to higher-paying customers. Columbian concedes that it moved Aroma's wine but claims that the move was temporary, that its purpose was to renovate the climate-controlled space and thereby increase its storage capacity, and that none of the wine was exposed to extreme temperature conditions. Aroma claims that the temperature changes destroyed the wine's salability.

Aroma filed the instant suit in the Kent Circuit Court. Its second amended complaint alleged four separate causes of action: (1) breach of contract, (2) violation of the Uniform Commercial Code, (3) common-law conversion, and (4) statutory conversion under MCL 600.2919a(1)(a). As part of its statutory conversion claim, Aroma alleged that Columbian "converted [Aroma's] wine inventory to its own use" and sought treble damages for the alleged statutory conversion. In response, Columbian countersued for breach of contract based on Aroma's nonpayment of rent.

The case proceeded to trial. At the close of Aroma's proofs, Columbian moved for a directed verdict on Aroma's fourth count, the statutory conversion claim, arguing that Aroma had failed to provide any evidence to support its assertion that Columbian converted Aroma's wine to its own use. In support of the motion, Columbian emphasized that implicit in the definition of the word "use" is an inference limiting the definition to "using something for the purpose ... intended by the nature of the product or good." Aroma sought a broader interpretation of "use" that did not limit its scope to acts involving the wine's intended purpose but instead encompassed acts by which the converter exercised its dominion and control over the wine. Under this interpretation, then, Columbian could "use" Aroma's wine by asserting dominion and control over that wine as leverage in the dispute over the balance due Columbian. The court agreed with Columbian's interpretation of "use," concluded that "one would have to drink [the wine] or perhaps sell it" to use it, and granted Columbian's motion for a directed verdict on Aroma's statutory conversion claim.

Trial continued on Aroma's remaining counts and on Columbian's counterclaim. At the conclusion of the trial, the jury found that Columbian had breached its contract with Aroma and converted Aroma's wine, awarding Aroma damages totaling $275,000. The jury also found that Aroma did not breach its contract with Columbian and, as a result, did not offset the award granted to Aroma by any amount.

Aroma appealed the circuit court's decision to grant Columbian's motion for a directed verdict on Aroma's statutory conversion claim. The Court of Appeals reversed, holding that the circuit court's interpretation of "use" was too narrow.⁴ While the panel noted the various definitions of "use," it determined that "most relevant in the context of conversion, ‘use’ is defined as ‘to employ for some purpose[.]’ "⁵ The panel explained that contrary to the circuit court's conclusion, "drinking or selling the wine are not the only ways that [Columbian] could have employed [Aroma's] wine to its own purposes."⁶ Because Aroma "presented some evidence to support its theory that [Columbian] filled the temperature-controlled storage space that [Aroma's] wine was moved out of with other customers' products," and because Columbian's claim that it was engaged in an expansion project "itself could be considered an act of employing the wine to [its] own purposes," Columbian was not entitled to a directed verdict.⁷ Rather, the panel concluded that

[i]f a jury believed the evidence showing that [Columbian] moved [Aroma's] wine for its own purposes—whether it be to sell the space to other customers or complete a construction project—or that it used the wine as leverage against [Aroma], it could have determined that [Columbian] converted the wine to its own use.^{[8 ]}

As a result, the Court of Appeals remanded this case to the circuit court for such a jury determination.⁹

Both parties then sought leave to appeal the Court of Appeals' interpretation of "own use." Aroma's appeal (Docket No. 148907) claimed that, like the circuit court, the Court of Appeals had erroneously defined statutory conversion as containing an additional element beyond those required to show common-law conversion. On this theory, and on the basis of the jury's finding of common-law conversion at trial, no further proceedings on the question of statutory conversion would be necessary and Columbian would be liable for statutory conversion. Columbian agreed with the Court of Appeals that statutory conversion requires a separate finding that the conversion was to the converter's "own use," but filed a separate application for leave to appeal (Docket No. 148909) that sought to reinstate the circuit court's narrower definition of "own use."

We granted both parties' applications for leave to appeal, limited to the single issue regarding "the proper interpretation of ‘converting property to the other person's own use,’ as used in MCL 600.2919a."¹⁰

II. STANDARD OF REVIEW

We review de novo a trial court's decision on a motion for a directed verdict.¹¹ A party is entitled to a directed verdict if the evidence, when viewed in the light most favorable to the nonmoving party, fails to establish a claim as a matter of law.¹²

We also review de novo questions of statutory interpretation.¹³ "When interpreting a statute, we follow the established rules of statutory construction, the foremost of which is to discern and give effect to the intent of the Legislature."¹⁴ The language of the statute is the most reliable evidence of that intent, and we enforce the clear and unambiguous language of the statute as written.¹⁵ "Effect should be given to every phrase, clause, and word in the statute and, whenever possible, no word should be treated as surplusage or rendered nugatory."¹⁶

III. LEGAL ANALYSIS

Under the common law, conversion is " ‘any distinct act of dominion wrongfully exerted over another's personal property in denial of or inconsistent with his rights therein.’ "¹⁷ At issue here is whether a plaintiff who has...