Doran v. Perrera

A-2214-97T2 (N.J. Super. App. Div. 1999) (Unpublished)
  • Opinion Date: February 10, 1999

PERSONAL LIABILITY; CONVERSION—A corporate officer who commits a tort, such as conversion, does not escape personal liability simply because the corporation may also be liable for the unlawful act.

The two shareholders of a bakery decided to conduct an auction sale of the bakery’s equipment. The high bidder paid the entire purchase price and then was able to remove all of the equipment except for three large pieces which required special handling. With the agreement of one of the shareholders, the buyer arranged to remove those three items about two weeks later. When the buyer appeared to remove the remaining items, the shareholder who had agreed to the arrangement refused to release them because of a dispute between shareholders which did not concern the buyer. About a month later, the shareholder agreed to turn over the equipment, but only on the condition that the buyer release him from any liability for his original refusal to release it. The buyer rejected the condition and filed a complaint seeking turnover of the goods and damages on the grounds that the shareholder’s actions constituted conversion and that the conversion had caused the buyer an expensive two month delay in opening its new bakery. The Appellate Division agreed with the lower court that conversion had taken place, but remanded the matter to the lower court to reconsider the lower court’s award of punitive damages or to articulate the basis for its award of punitive damages. Punitive damages are not granted as a matter of course simply because someone has committed an intentional tort. There must be a showing that the “wrong doer’s conduct is especially egregious.” The shareholder also raised the defense that it was acting on behalf of the corporation. This defense was rejected because, “[a] corporate officer who commits a tort does not escape personal responsibility simply because the corporation may also be liable for his unlawful act.”