AAAG California v. Kisana, 439 F.Supp.3d 1265

Background:

AAAG-California (an auction house) sold ~43 vehicles to defendant Abdul R. Kisana and his Utah dealerships but retained legal title until full payment.
An AAAG employee surreptitiously shipped the titles to Defendants, who then converted the cars by selling most (or all) without paying AAAG.
AAAG uncovered video and shipping-evidence, filed suit, obtained temporary restraining orders, and a receiver was appointed; Defendants were served and subsequently moved to oppose equitable relief.
Defendants conceded nonpayment and argued AAAG is only an unsecured creditor entitled to money damages (invoking the economic-loss rule and the existence of a contract).
The court found AAAG likely to succeed on a conversion claim, concluded equitable remedies (constructive trust, asset freeze, tracing, receiver) are available, and granted a preliminary injunction freezing Defendants’ assets and enjoining further transfers of the listed vehicles and related documentation.

Issues:

Issue	Plaintiff's Argument	Defendant's Argument	Held
1) Likelihood of success on conversion claim	Defendants stole titles and converted AAAG's vehicles; AAAG owned the cars and has evidence	Defendants did not dispute facts but argued remedy should be only contractual damages	Court: AAAG likely to prevail on conversion; defendants’ conduct was active/egregious misconduct supporting conversion
2) Availability of equitable relief (constructive trust, tracing, receiver)	Conversion of titled vehicles supports constructive trust, tracing of proceeds, equitable lien or subrogation	Equitable relief unavailable because AAAG is only a general creditor and sold vehicles mean proceeds dissipated	Court: Equitable relief is available; AAAG likely entitled to constructive trust, tracing, and related remedies; receiver and asset freeze appropriate
3) Applicability of the economic-loss rule	Conversion is a tort based on independent duty not to take another’s property and is separable from contract	The sales contract governs disputes; economic-loss rule limits tort recovery to contract remedies	Court: Economic-loss rule does not bar conversion; duty not to steal is independent of contractual duties
4) Whether an express contract bars constructive trust / unjust enrichment remedy	AAAG’s remedy arises from tort (conversion), so constructive trust is available even with a contract	Express contract bars unjust enrichment and thus constructive trust remedy	Court: An express contract bars a freestanding unjust-enrichment claim but does not bar a constructive trust for a conversion claim; constructive trust available here

Key Cases Cited

Winter v. Natural Res. Def. Council, Inc., 555 U.S. 7 (2008) (standard for preliminary injunctions)
Grupo Mexicano de Desarrollo S.A. v. Alliance Bond Fund, Inc., 527 U.S. 308 (1999) (limits on asset freezes for money-damages claims)
Deckert v. Independence Shares Corp., 311 U.S. 282 (1940) (equitable relief may issue where complaint seeks equitable remedies)
Fibro Trust, Inc. v. Brahman Fin., Inc., 974 P.2d 288 (Utah 1999) (definition and elements of conversion under Utah law)
Alta Indus. Ltd. v. Hurst, 846 P.2d 1282 (Utah 1993) (conversion and receiving stolen property)
Wilcox v. Anchor Wate, Co., 164 P.3d 353 (Utah 2007) (elements for constructive trust under Utah law)
Rawlings v. Rawlings, 240 P.3d 754 (Utah 2010) (flexible nature of unjust enrichment and constructive trust remedies)
U.S. Fiduciary v. U.S. Sports Specialty, 270 P.3d 464 (Utah 2012) (express contract bars freestanding unjust-enrichment claim)
HealthBanc Int'l, LLC v. Synergy Worldwide, Inc., 435 P.3d 193 (Utah 2018) (economic-loss rule and separability of tort/duty)
Zagg, Inc. v. Harmer, 345 P.3d 1273 (Utah Ct. App. 2015) (loss of secured collateral can be irreparable because it destroys leverage)
Henderson v. For-Shor Co., 757 P.2d 465 (Utah Ct. App. 1988) (noting money damages are available for conversion but not holding them exclusive)