DeChristofaro v. Machala

• Court: Rhode Island Supreme Court
• Writing for the Court: LEDERBERG
• Citation: DeChristofaro v. Machala, 685 A.2d 258 (R.I. 1996)
• Decision Date: 15 November 1996
• Docket Number: No. 94-558-A,94-558-A
• Parties: Joseph DeCHRISTOFARO et al. v. Edward W. MACHALA d.b.a. Bryrik Builders. ppeal.

Page 258

685 A.2d 258

Joseph DeCHRISTOFARO et al. v. Edward W. MACHALA d.b.a. Bryrik Builders.

No. 94-558-Appeal.

Supreme Court of Rhode Island.

Nov. 15, 1996.

Amato DeLuca, Providence, Miriam Weizenbaum, Pawtucket, for Plaintiff.

Lauren Jones, Raymond Pezza, Providence, for Defendant.

OPINION

LEDERBERG, Justice.

This matter came before the Supreme Court on the appeal of the defendant, Edward W. Machala d.b.a. Bryrik Builders, from a judgment entered by the Superior Court upon jury verdicts in favor of the plaintiffs, Joseph and Cherubina DeChristofaro, who brought claims for breach of contract, conversion, and punitive damages. On appeal, the defendant challenged (1) the submission of the conversion and punitive-damages claims to the jury, (2) the exclusion of statements made by the plaintiffs in the course of other litigation arising from the same house-construction project, (3) the admission of expert testimony regarding costs of construction of the house, and (4) the admission into evidence of a compilation of invoices and payments related to the construction. For the reasons stated below, we reverse the trial court's denial of the defendant's motion for a directed verdict on the conversion count and vacate the award of punitive damages but otherwise affirm the judgment of the Superior Court. The facts and procedural history pertinent to this appeal follow, with additional facts presented in the legal analysis of the issues.

Facts and Procedural History

In April 1988, plaintiffs purchased a partially finished house in East Greenwich, Rhode Island, and on May 27, 1988, signed a contract with defendant, who agreed to complete construction of the house by December 1988 for a sum not to exceed $317,000. The contract provided for payment by plaintiffs in the following installments: one-sixth within twenty days of the contract's effective date, one-sixth at the commencement of brick and masonry work, one-third upon completion of all plastering, and the final third at the closing.

The plaintiffs made the first two payments according to schedule. Controversy arose, however, concerning the third payment. The defendant sent plaintiffs an invoice in the amount of $107,911.67. The plaintiffs responded with a check in the amount of $98,776.67, which was $9,135 less than the invoice amount. The plaintiffs explained that they had taken a credit for amounts they had paid for certain kitchen appliances and electrical equipment. According to plaintiffs, defendant was obligated to pay for those items under the contract but had neglected to do so. The defendant took the position that plaintiffs' failure to pay the full amount of the installment was a breach of contract. The parties were unable to work out their differences, and on December 4, 1988, defendant abandoned the project.

On December 23, 1988, plaintiffs filed a complaint against defendant, alleging breach of contract and conversion, and requested punitive damages on the conversion count. The defendant counterclaimed, asserting that it was plaintiffs who had breached the contract. After more than five years of pretrial activity, trial was finally held on the parties' claims in February and March of 1994. At the close of evidence, defendant moved for a directed verdict on the conversion count. ¹ The trial justice denied the motion, finding the evidence sufficient to submit the claim of conversion to the jury. ² The jury returned a verdict for plaintiffs in the amount of $250,000 for breach of contract and $50,000 for conversion. Relying on the jury's finding of conversion, the trial justice submitted the issue of punitive damages to the jury. The jury then returned a second verdict for plaintiffs, this time in the amount of $100,000 in punitive damages. The defendant's motion for a new trial and/or remittitur was denied, and defendant appealed to this Court, pursuant to G.L.1956 § 9-24-1.

1. Conversion and Punitive Damages

On appeal, defendant argued that the trial justice erred in denying defendant's motion for a directed verdict on the conversion count. The standard of review on a motion for a directed verdict is well settled: the trial justice, and this Court on review, considers the evidence in the light most favorable to the nonmoving party, without weighing the evidence or evaluating the credibility of witnesses, and draws from the record all reasonable inferences that support the position of the nonmoving party. Hoffman v. McLaughlin Corp., 675 A.2d 404, 405 (R.I.1996). If, after such a review, there remain factual issues upon which reasonable persons might draw different conclusions, the motion for a directed verdict must be denied, and the issues must be submitted to the jury for determination. Id.

The defendant argued that an action for conversion could not lie on the facts of this case. Essentially, defendant contended that plaintiffs were alleging a conversion of money and that an action for conversion of money could not be sustained in the absence of proof that defendant was under a duty to return or otherwise particularly to utilize specific, identifiable, and segregated money, which was not the case here. Absent such a duty, plaintiffs' only remedy was in contract. The plaintiffs did not dispute this general proposition of law but argued instead that testimony at trial established that defendant converted their tangible personal property, including building materials and hardware, and not merely money paid on the contract. This testimony coupled with supporting documentary evidence, according to plaintiffs, was sufficient to support a finding of conversion.

"[T]he gravamen of an action for conversion lies in the defendant's taking the plaintiff's personalty without consent and exercising dominion over it inconsistent with the plaintiff's right to possession." Fuscellaro v. Industrial National Corp., 117 R.I. 558, 560, 368 A.2d 1227, 1230 (1977). The focus of inquiry is "whether [a] defendant has appropriated to his [or her] own use the chattel of another without the latter's permission and without legal right." Terrien v. Joseph, 73 R.I. 112, 115, 53 A.2d 923, 925 (1947).

In their complaint, plaintiffs alleged that defendant "unlawfully took and carried away certain tangible personal property items belonging to [plaintiffs], including, but not limited to, building materials and hardware, thereby converting and disposing of these items to his own personal use." At trial, plaintiffs adduced evidence tending to prove that defendant had, on several occasions, invoiced plaintiffs for items that were never installed in their house. Among the items allegedly charged to but never received by plaintiffs were cement blocks, bricks, gravel, doors, extension jambs, screens, and a jacuzzi. Some of these items, according to plaintiffs, were installed in defendant's home; other items simply remained unaccounted for. One of the invoices cited by plaintiffs as evidence of conversion was that for framing of the house, which, according to plaintiffs, never actually occurred. For each allegedly converted item, however, plaintiffs offered no actual evidence of ownership or of a possessory interest in the item at the time of the conversion or, for that matter, at any time thereafter. Rather, plaintiffs essentially argued that defendant systematically billed them for items called for under the contract and then failed to actually install these items in their house.

It has long been the law in Rhode Island that in order to sustain an action for conversion of personal chattels, a plaintiff must demonstrate an ownership or possessory interest in the property at the time of the conversion. Larson v. Dawson, 24 R.I. 317, 318, 53 A. 93, 94 (1902); see also 18 Am.Jur.2d Conversion § 2 at 146-47 (1985). A plaintiff must also identify the allegedly converted property with reasonable certainty, in order to render it capable of identification, for the purpose of determining whether the property in fact belonged to the plaintiff at the time of its conversion. Larson, 24 R.I. at 318, 53 A. at 94.

The plaintiffs in the instant case have altogether failed to show or even to allege facts demonstrating an ownership or possessory interest in the allegedly converted items. Cf. Burras v. Canal Construction and Design Co., 470 N.E.2d 1362, 1368 (Ind.Ct.App.1984) (uncontroverted testimony established that keys, window screens, and garage-door opener taken by contractor belonged to the plaintiff). Although it is true that defendant was under a contractual obligation to install in plaintiffs' house items of the type allegedly converted, he was under no obligation to install the specific items allegedly converted to his own use. Presumably, had he installed items in his own house originally purchased on plaintiffs' account, and then bought identical items on his personal account and installed them in plaintiffs' house, his contractual obligations concerning those items would have been discharged. Although defendant's record-keeping practices were grossly inadequate, the mere entry of a record indicating that an item had been purchased for eventual installation in plaintiffs' home was not sufficient to convert plaintiffs' contractual right to have such an item installed into an immediate right to possession of the purchased item, interference with which would be actionable in tort. Cf. Royce, Allen & Co. v. Oakes, 20 R.I. 418, 420-21, 39 A. 758, 758-59 (1898) (in case of money had and received, remedy is in assumpsit or debt and not in tort). Having shown no more than that defendant charged them for items they never received, plaintiffs have failed to establish a claim for conversion.

The plaintiffs attempted to salvage their conversion claim by suggesting that defendant converted the money they paid on the contract. That this conversion claim played a role in the proceedings is evidenced by plaintiffs' closing arguments and the trial justice's charge to the jury. In closing...