MEMORANDUM OPINION
This сase arose after Defendant Next-day Network Hardware Corp. (“Nextday”) bought hundreds of thousands vof dollars’ worth of information technology (“TT”) equipment from an individual who stole
BACKGROUND
The following facts are described as alleged in the Complaint. ECF No. 1. Christopher Brian Crowe was an Associate Network and Telecommunications Analyst at Vectren. In November 2012, Vectren discovеred that Crowe had been stealing new and slightly used IT equipment from Vectren data centers and other locations. The fair market value of the stolen IT equipment totaled $919,338.05. Crowe then sold the stolen IT equipment through online auction website eBay.com to Next-day for $228,609.15. Great American alleges that Banyong and ten unidentified Nextday employees participated in purchasing the equipment from Crowe, including setting the purchase price and providing the shipment information.
Crowe was eventually arrested by the Evansville Police Department (“EPD”) in Indiana and charged with two counts of theft. He later pleaded guilty to the charges. In March 2013, the EPD informed Nextday that the IT еquipment it purchased from Crowe was stolen. Despite the EPD’s attempts to make arrangements for the equipment’s return to Vectren. Banyong resisted and told the EPD that he planned to sell the remaining equipment he bought from Crowe. Great American paid. Vectren for the loss and, on April 30, 2014, filed suit against Defendants. Defendants now move to dismiss.
DISCUSSION
I. Legal Standards
Tо defeat a motion to dismiss under Federal Rule of Civil Procedure 12(b)(6), the complaint must allege enough facts to state a plausible claim for relief. Ashcroft v. Iqbal,
The parties have attached multiple exhibits to their memoranda briefing the Motion, including email correspondence, website printouts, and an affidavit from Banyоng. Typically, when deciding a Rule 12(b)(6) motion, the court considers only the complaint and any attached documents “integral to the complaint.” Sec’y of State for Defence v. Trimble Navigation Ltd.,
This case is governed by Maryland law. As thе forum state. Maryland’s choice of law rules apply. See Klaxon Co. v. Stentor Elec. Mfg. Co.,
II. Conversion
Great American sufficiently states a plausible claim for conversion by alleging that Defendants purchased goods that Crowe had stolen from Vectren, then sold them to other buyers. Under Maryland law, conversion involves any distinct act of dominion or control “ ‘exerted by one person over the personal property оf another in denial of his right 'or inconsistent with it.’ ” Allied Inv. Corp. v. Jasen,
Defendants argue that the en-trustment provision of the Commercial Law Article of the Maryland Code, which adopts a provision of the Uniform Commercial Code (“UCC”), precludes any conversion claim. This provision provides that “[a]ny entrusting of possession of goods to a merchant who deals in goods of that kind gives him power to transfer all rights of the entruster to a buyer in ordinary course of business.” Md.Code Ann., Com. Law § 2-403(2) (West 2014). The entrustment provision is mеant to safeguard unsuspecting buyers who purchase goods from merchants in good faith. See Lakes Gas Co. v. Clark Oil Trading Co.,
For the entrustment provision to apply, (1) there must be an entrustment of goods; (2) that entrustment must be to a “merchant who deals in goods of that kind”; and (3) the transfer must be to a buyer in the ordinary course of business who purchases in good faith, without knowlеdge that the sale violates ownership rights. Id. Here, Defendants argue that the entrustment provision applies because Crowe entrusted the stolen IT equipment to Nextday, Nextday is a merchant who deals in goods of that kind, and Nextday was a buyer in the ordinary course of business. Defs.’ Mem. Supp. Mot. Dismiss at 11-13. This argument, however, suffers from three fundamentаl deficiencies. First, the entrustment provision inherently requires three separate parties — an owner, a merchant, and a buyer — as it only ap--plies when a rightful owner attempts to sue a buyer after the buyer purchases goods from a merchant. Nextday cannot be both the merchant and the buyer in this scenario.
Second, the entrustmеnt provision leaves the merchant potentially liable for conversion. See 2 William D. Hawkland et al., Uniform Commercial Code Series § 2-403:4 (noting that, although the entrustment provision protects the buyer from suit, the owner “will have rights against the merchant who sold the goods for conversion or other common law remedies as appropriate”). Thus, if the provision applies here and Nextday is the merchant, as Nextday claims, then the entrustment provision would not protect Nextday from suit. Instead, the provision would protect only the subsequent buyers to whom Next-day sold the stolen IT equipment.
Third, the entrustment provision does not apply where the “entrusting” party stole the goods. At its corе, the en-trustment provision works by giving the merchant “power to transfer all rights of the entruster to a buyer in ordinary course of business.” See Md.Code Ann., Com. Law § 2-403(2). In Inmi-Etti, the court explained that only a person with “voidable” title has the power to entrust goods under this provision. Id. at 920 (citing Md.Code Ann., Com. Law § 2-403(1) (“A person with voidable title has power to transfer a good title to a good fаith purchaser for value.”)). “Voidable” title is obtained where the owner voluntarily transfers the goods. Id. at 923. If the goods are stolen, only “void” title is obtained, and the thief cannot pass along good title to a good faith purchaser. Id. at 921, 923. Where, as here, the “entrusting” party, Crowe, had stolen the equipment, he had only void title and therefore had no rights in the goods to transfer to the merchant, who then could not lawfully transfer any rights to the buyer. See Inmi-Etti,
The facts of Inmi-Etti illustrate the inapplicability of the entrustment provision to Nextday. There, the plaintiff had allowed an acquaintance, David Butler, to receive her new car; Butler then con
Notably, the Inmi-Etti court reached that conclusion even though it was uncleаr whether Butler had stolen the car. See id. (“[T]he record is not sufficient for us to decide whether Butler actually stole the [plaintiffs] vehicle.”). Here, where Great American expressly alleges that Crowe stole the IT equipment, Compl. ¶ 9, the facts more strongly indicate that Crowe obtained void title and could not convey good title to Nextday as the merchant. Even then, as discussed above, the en-trustment provision would protect only the buyers of the goods from Nextday, not Nextday itself.
Even if Nextday were viewed as the “buyer in the ordinary course of business,” the entrustment provision still would not apply. Under that analysis, Vectren would be the owner; Crowe, the merchant; and Nextday, the buyer. The provision would not apply because Vectren did not entrust the IT equipment to Crowe. Robison,
Furthermore, there is no basis to find that Crowe was a “merchant who deals in goods of that kind.” Robison,
III. Aiding and Abetting Conversion -
Great American adequately states a claim for aiding and abetting, conversion. A person can be held liable for a tort “if be, by any means (words, signs, or motions) encouraged, incited, aided or
Defendants argue that no underlying tortious activity exists because they purchased the IT equipment lawfully after Crowe had already converted it. By providing an оutlet through which Crowe could dispose of the stolen goods, however, Nextday could be found to have aided and abetted the conversion. Cf. United States v. Armetta,
IV. Civil Conspiracy
Great American has also sufficiently alleged a claim of civil conspiracy. Civil conspiracy requires “(1) a confederation of two or more persons by agreement or understanding; (2) somе unlawful or tortious act done in furtherance • of the conspiracy or use of unlawful or tortious means to accomplish an act not itself illegal; and (3) actual legal damage resulting to the plaintiff.” Lloyd v. Gen. Motors Corp.,
Defendants argue that Great American fails to state a civil conspiracy claim because nothing in the Complaint suggests an agreement or understanding between the parties. Proof of civil conspiracy, however, can be in the form of circumstantial evidence. Daugherty v. Kessler,
As such, the facts alleged sufficiently support an inference that Defendants bought and sold goods from Crowe with a common understanding that their actions would facilitate the unlawful conversion of property, and that Vectren was thereby harmed. Defendants purchased a large volume of IT equipment at a price four times lower than fair market value, from an individual' seller with no ostensible background in the procurement or sale of that type of equipment. Compl. ¶¶ 12, 21, 30-31, 34. Under these circumstances, one could infer thаt Nextday was part of a conspiracy by acting as a “fence” to dispose of goods stolen by Crowe. Cf. United
CONCLUSION
For the foregoing reasons, Defendants’ Motion to Dismiss for Failure to State a Claim. ECF No. 7, is DENIED. A separate Order follows.
Notes
. Defendants analyze this matter under Maryland law but identify Ohio and Indiana as additional states with equities in the case. See Defs.’ Mem. Supp. Mot. Dismiss at 7-8. They acknowledge, however, that because all three states adopted the Uniform Commercial Code provision аt issue in this case, the "decision should be the same regardless of this Court's choice-of-law determination.” Id. at 8. Although Great American does not concede that Maryland law applies, it acknowledges that the relevant Maryland law does not conflict with the laws of those other jurisdictions. See Pl.’s Mem. Opp. Defs.’ Mot. Dismiss at 7 n. 1, ECF No. 8.
. As to the entrustment provision specifically, the court added that the provision did not apply because “there was no evidence that Butler was a ‘merchant who deals in goods of that kind' (i.e. automobiles).” Id. at 921.