United States District Court, Eastern District of New York
April 25, 2000
KEITH ASDOURIAN, AND BLUE CHIP MORTGAGE CORP., PLAINTIFFS,
GARY KONSTANTIN, DEFENDANT.
The opinion of the court was delivered by: Spatt, District Judge.
MEMORANDUM OF DECISION AND ORDER
On December 20, 1998, the plaintiffs Blue Chip Mortgage Corporation
("Blue Chip") and Keith Asdourian ("Asdourian") filed a forty-three page
amended complaint, naming twenty-one defendants and containing twelve
separately designated causes of action. The underlying facts of the
amended complaint were detailed in two separate opinions. See Asdourian,
et al. v. Konstantin, et al., 50 F. Supp.2d 152 (E.D.N.Y. 1999) (denying
plaintiffs' motion for a preliminary injunction); Asdourian, et al. v.
Konstantin, et al., 77 F. Supp.2d 349 (E.D.N.Y. 1999) (denying
defendants' motion to dismiss) and will not be repeated here.
As a result of settlements and/or defaults on the part of various
defendants, the plaintiffs proceeded to trial against only defendant
Konstantin. The trial commenced on February 2, 2000 and lasted seven
days. Eight witnesses testified and more than seventy exhibits were
introduced into evidence. After the plaintiffs concluded their case, the
defendant rested without calling a witness. Pursuant to Rule 50 of the
Federal Rules of Civil Procedure ("Fed. R. Civ.P."), the defendant made a
motion to dismiss the plaintiffs' case in its entirety. The Court
dismissed all four counts of the plaintiffs' RICO claims and all but two
of the remaining New York State common law causes of action. The only
remaining causes of action for the consideration of the jury were the
common law claims of conversion and breach of contract. In denying the
defendant's motion for judgment as a matter of law on Blue Chip's
conversion claim, the Court stated:
With regard to the motion for judgment as a matter of
law at the end of the plaintiffs' case and at the end
of the entire case on the conversion count, which is
Count Two, the Court finds that there is sufficient
proof that the defendant diverted monies belonging to
Blue Chip to his own uses, to either personal use or
his own business use. He was not the owner of the
company, and at least there is a jury question as to
whether he did divert this money.
On February 11, 2000, the jury rendered a verdict in favor of Blue Chip
on its conversion claim and in favor of the defendant on the breach of
contract cause of action. Specifically, the jury found that Blue Chip had
proved that Konstantin wrongfully converted: (1) checks for costs
associated with his companies; (2) monies from the Blue Chip escrow
account; and (3) the proceeds of the sale of the properties paid for and
deeded to Blue Chip. The jury awarded $300,000 in compensatory damages,
but did not award punitive damages.
Following the jury's verdict, the defendant moved pursuant to
Fed.R.Civ.P. 50 and 59 for judgment as a matter of law and for a new
trial. The Court granted the defendant's request to present those motions
on paper with the benefit of the trial transcript. In accordance with the
Court's schedule, the motions were fully briefed and submitted on April
11, 2000. Neither Blue Chip nor the defendant requested oral argument,
and have notified the Court of their intention that the motion be decided
on the submitted papers.
A. Fed.R.Civ.P. 50
A court decides a motion for judgment as a matter of law under Fed.
R.Civ.P. 50(a)(1) using the same standard that applies to motions for
summary judgment. Alfaro v. Wal-Mart Stores, Inc., 2000 WL 287314 (2d
Cir. 2000). The motion must be denied unless the court finds that there
is such a complete absence of evidence supporting the verdict that the
jury's finding could only have been the result of sheer surmise and
conjecture, or if the evidence is so overwhelming that reasonable and
fair minded persons could only have reached the opposite result.
Ryduchowski v. Port Authority of New York, 203 F.3d 135, 141-42 (2d Cir.
2000); see also This Is Me, Inc. v. Taylor, 157 F.3d 139 (2d Cir. 1998);
Concerned Area Residents for the Environment v. Southview Farm, 34 F.3d 114
(2nd Cir. 1994); Weldy v. Piedmont Airlines, 985 F.2d 57 (2d Cir. 1993).
In making this determination, the court is required to view the evidence
in the light most favorable to, draw all reasonable inferences in favor
of, and resolve all credibility disputes to the benefit of the non-moving
party — in this case, the plaintiff Blue Chip Mortgage Corp.
Ryduchowski, 203 F.3d at 142; Martinelli v. Bridgeport Roman Catholic
Diocesan Corp., 196 F.3d 409, 425 (2nd Cir. 1999); Stagl v. Delta Air
Lines, Inc., 117 F.3d 76, 79 (2nd Cir. 1997).
The defendant makes three arguments in support of his motion for
judgment as a matter of law on the conversion cause of action. First, the
defendant submits that he and Asdourian were joint-venturers and thus the
plaintiff Blue Chip is not entitled to maintain a conversion cause of
action. Next, the defendant claims that Blue Chip may not recover in
conversion for the wrongful sale of real property. Finally, the defendant
contends that Blue Chip failed to establish the existence of any
"specifically identifiable" property that Konstantin was legally
obligated to return.
"Conversion is any unauthorized exercise of dominion or control over
property by one who is not the owner of the property which interferes with
and is in defiance of a superior possessory right of another in the
property." Schwartz v. Capital Liquidators, Inc., 984 F.2d 53, 54-55 (2d
Cir. 1993) (quoting Meese v. Miller, 79 A.D.2d 237, 436 N.Y.S.2d 496, 500
[N.Y.A.D. 1981]). "Conversion is the unauthorized assumption and exercise
of the right of ownership over goods belonging to another to the
exclusion of the owner's rights." Elma RT and Nagykoros Canning Factory
RT v. Landesmann Int'l Marketing Corp., 2000 WL 297197, *3 (S.D.N.Y.
March 22, 2000) (citing Vigilant Ins. Co. of America v. Housing Auth. of
City of El Paso, Texas, 87 N.Y.2d 36, 44, 637 N.Y.S.2d 342, 660 N.E.2d 1121
); see also Baker's Aid v. Hussmann Foodservice Co.,
730 F. Supp. 1209, 1213 (E.D.N.Y. 1990). "The test for conversion is
whether a party exercises dominion or actually interferes with the
property to the exclusion or in defiance of the plaintiffs rights." Id. at
1. As to the Joint Venture Agreement
The defendant argues that "[a]s a matter of law, Blue Chip is not
entitled to maintain an action in conversion against Konstantin, its
co-joint venturer." In support of this contention, the defendant cites
Sohon v. Rubin, 282 A.D. 691, 122 N.Y.S.2d 439 (1st Dep't 1953) which
held that "[i]f one partner betrays his trust, and converts to his own
use partnership property, he incurs the usual liability . . . to be held
in an accounting; but he cannot be sued by the other partner for damages
in an action of conversion." Id. at 691-92, 122 N.Y.S.2d at 440. While
the Court recognizes this general rule, the evidence at trial indicated
that the partnership or joint venture had been terminated. On direct
examination, the plaintiff testified as follows:
Q: You complained to Mr. Konstantin that you didn't
receive the ten percent, were any actions taken in
connection with that?
A: Ultimately, in, I believe, it was September of
'97, I terminated the agreement. I terminated this
agreement and I terminated the lease management
(Tr. 55-56) (emphasis added).
In addition to the testimony of the plaintiff, it is clear that the
jury recognized that the "joint venture" had been terminated. During
deliberations, the jury asked the following question:
Can we have the testimony of both parties, both Keith
Asdourian and Gary Konstantin, regarding the "oral
agreement" after the 7/18/96 was terminated?
(Tr. 1130) (emphasis added). As the joint venture had been terminated,
the conversion cause of action was viable. See Prudential Ins. Co. of
America v. Hilton Hotels Corp., 1996 WL 340002, *10 (S.D.N Y June 19,
1996) (sustaining a conversion cause of action as the joint venture was
in the process of dissolving). Accordingly, the defendant's motion for
judgment as a matter of law on the ground the plaintiffs and the
defendant were joint venturers is denied.
2. As to Conversion of Real Property
The defendant argues that the conversion cause of action should be
dismissed as an action sounding in conversion does not lie where the
property involved is real property. While this statement of the law may be
correct, the evidence at trial indicated that Konstantin wrongfully
converted the proceeds of the sale of the properties deeded to Blue Chip
or in which Blue Chip held an interest, and not the real properties
themself. In fact, the verdict sheet specifically questioned the jury as
to whether the defendant had "converted proceeds of the sale of the
properties paid for and deeded to Blue Chip." (emphasis added). As the
conversion cause of action concerned the proceeds of the sale of
properties and not the conversion of real property itself, the Court
denies the defendant's motion for judgment as a matter of law with regard
to the contention that Blue Chip may not recover in conversion for the
wrongful sale of real property. See Frankie J. Congram v. Raymond Giella
Congram Realty Corp., 1992 WL 349845 (S.D.N.Y. Nov.10, 1992)
(distinguishing between a claim for conversion of real property and a
claim for the proceeds from the sale of real property).
3. As to Specifically Identifiable Property
Finally, the defendant claims that Blue Chip "failed to allege, let
alone establish, the existence of a specific, identifiable fund to which
it had a superior right of possession." The Court disagrees. The evidence
admitted at trial delineated specific Blue Chip personal property that
was converted by Konstantin. There was evidence of Konstantin's use of
specific Blue Chip bank accounts and escrow accounts for his personal
expenses. See Tr. 117-123, 206-208, 468-469, 477-479, 485, 497, 500-504,
544, 564-566, 615.
In addition, these various forms of identifiable property were referred
to in the Court's verdict sheet which specifically asked the jury whether
Blue Chip had proven that the defendant converted checks, monies, and/or
proceeds of the sale of properties paid for and deeded to Blue Chip. In
fact, while the jury found that Blue Chip proved that the defendant
converted checks, money from the Blue Chip escrow account, and the
proceeds of sale from Blue Chip, it did not find that the defendant
wrongfully converted monies collected from costs paid to by Blue Chip by
mortgage applicants. These jury findings show that Blue Chip had in fact
identified specific property that was converted by the defendant, or so
the jury determined.
Accordingly, the Court denies the defendant's motion for judgment as a
law as to the claim that Blue Chip failed to specifically identify
property to which it had a superior right of possession.
B. Fed.R.Civ.P. 59
By the provisions of Rule 59, a motion for a new trial may be granted
when the court finds that "the jury has reached a seriously erroneous
result or that the verdict is a miscarriage of justice." United States
v. Landau, 155 F.3d 93, 104 (2d Cir. 1998) (internal quotations
omitted); see also LaBounty v. Rivera, 1999 WL 1129063, *4 (S.D.N.Y.
Dec.8, 1999); Falco v. Stew Leonard's, 187 F.R.D. 442, 444-45 (D.Conn.
The defendant contends that the testimony proffered in support of the
plaintiffs claim of conversion was "utterly confusing" and "not credible."
In addition, the defendant argues that the jury's award of $300,000 in
compensatory damages was "the result of pure conjecture, unrelated to any
reasonable calculation based on the evidence presented."
While the Court did comment in the absence of the jury that it believed
that the presentation of the evidence, witnesses, and documents was
confusing, the Court does not believe a miscarriage of justice resulted.
Attempting to prove a RICO cause of action, by its very nature, can
result in some confusing and multifaceted evidence. Bearing in mind the
fundamental public policy consideration that a court should rarely
disturb the jury's evaluation of the witnesses and its findings of fact,
the Court finds that the verdict in favor of Blue Chip and the award of
$300,000 was not against the weight of evidence and not seriously
erroneous. Accordingly, the Court denies the defendant's motion for a new
Having reviewed the parties' submissions and for the reasons set forth
above, it is hereby
ORDERED, that defendant's motion for judgment as a matter of law
pursuant to Rule 50 of the Federal Rules of Civil Procedure is DENIED; and
it is further
ORDERED, that the defendant's motion for a new trial pursuant to Rule
59 of the Federal Rules of Civil Procedure is DENIED; and it is further
ORDERED, that the Clerk of the Court is to enter judgement in favor of
Blue Chip Mortgage Corporation and against Gary Konstantin on its
conversion cause of action in the sum of $300,000 and to dismiss the
remaining causes of action brought by the plaintiffs Keith Asdourian and
Blue Chip Mortgage Corp.; and it is further
ORDERED, that the Clerk of the Court is directed to close this case.