Welco Electronics, Inc. v. Mora
223 Cal. App. 4th 202
| Cal. Ct. App. | 2014Background
- Welco discovered large unexplained credit-card charges billed to a fictitious vendor name (AQM) totaling about $372,039, missing from in-office records. A forensic accountant confirmed unrecorded transactions and concealment in Welco’s books.
- Defendant Mora operated a property-management business (doing business as AQM Supplies) from Welco’s offices and had access to Welco’s credit-card account via a card terminal in the office; Natalie Anderson (Welco’s accountant) did not answer and defaulted.
- Mora acknowledged running about 50–60 invoices through a card terminal that deposited proceeds into his bank account and said the arrangement was intended as payment for prior services; Welco denied consent and claimed theft/conversion.
- Welco sued Mora and Anderson for conversion of money (complaint sought approximately $376,142.70); Mora cross-complained for breach relating to removal from premises.
- At bench trial the court denied Mora’s nonsuit motion; the trial court found Mora stole $372,039.01 and entered judgment for Welco for principal plus prejudgment interest; Mora appealed the nonsuit denial and judgment.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether use of Welco’s credit card/account to divert funds to Mora constitutes conversion | Mora’s unauthorized use of Welco’s card/credit line wrongfully transferred a specific sum of Welco’s property to Mora — actionable conversion of an intangible financial interest | Credit-card transactions and related disputes do not equate to conversion of intangible rights; some transactions were legitimate payments or not a specific identifiable taking | Court: Yes. Unauthorized transfers via Mora’s terminal converted Welco’s intangible property (credit balance/right to use) and supported conversion liability |
| Whether conversion of money requires a single entrusted lump sum or trust relationship | Welco: need only identify a specific, ascertainable sum taken (here $372,039.01) — need not be a single lump sum held in trust | Mora: taking various amounts over time without trust does not support conversion | Court: Plaintiff proved a specific, identifiable total amount taken; conversion of money may lie where amounts are ascertainable even if taken over time |
| Whether doctrine limiting conversion of intangibles (or policy concerns) bars Welco’s claim | Welco: modern law extends conversion to certain intangibles representing definite, exclusive rights; no unusual policy concerns here | Mora: broad extension would make routine credit-card disputes into conversion claims; Moore (bio-sample case) warns against novel tort expansion | Court: Extension is appropriate here: no complex policy issues; this is theft-like misappropriation of a financial right, within existing conversion principles |
| Whether good faith or purported agreement defeats conversion | Welco: conversion is strict liability; defendant’s subjective good faith is immaterial | Mora: claimed agreement with Welco’s president and prior payments justify his receipts | Court: Good faith/claimed agreement immaterial to conversion; trial court rejected Mora’s version and found unauthorized taking |
Key Cases Cited
- Payne v. Elliot, 54 Cal. 339 (discussing expansion of trover/conversion beyond tangible chattels)
- Haigler v. Donnelly, 18 Cal.2d 674 (money may be subject of conversion when a specific identifiable sum is taken)
- Acme Paper Co. v. Goffstein, 125 Cal.App.2d 175 (conversion for wrongful exercise of dominion over checks used for defendant’s benefit)
- Kremen v. Cohen, 337 F.3d 1024 (9th Cir.) (recognizing conversion claims for modern intangible property rights such as domain names)
- Fremont Indemnity Co. v. Fremont General Corp., 148 Cal.App.4th 97 (recognizing conversion of certain intangible tax/accounting rights where owner’s exclusive use is clear)
- Moore v. Regents of Univ. of Cal., 51 Cal.3d 120 (refusing to extend conversion to complex policy-laden contexts; distinguished here)