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RMM Metallhandel, GmbH v. Lion Metals, Inc.

02-1568 (U.S. Dist. Ct. D. N.J. 2004) (Unpublished)

CONVERSION—In a contract dispute, once title to the goods has passed to the buyer, the buyer can not be guilty of conversion even if the buyer does not pay for the goods.

In August and September of 1997, a buyer purchased scrap metal for $226,637.10. The buyer accepted the metal but paid only a portion of the contracted price. With the buyer’s consent, the seller took back a portion of the scrap metal from the buyer and sold it for $50,217.15. The buyer then sold the remainder of the scrap metal. However, it never paid the remaining balance of $138,698.73. The contract provided that title passed to the buyer upon delivery.

On April 9, 2002, the seller sued the buyer, alleging breach of contract, conversion, and unjust enrichment. The Court granted the buyer summary judgment for breach of contract because the four year statute of limitations had expired. As to the unjust enrichment claim, the seller asserted that, although an express contract existed covering the subject matter of the dispute, it was nonetheless entitled to recovery under the doctrines of wrongful enrichment and implied contract. The Court disagreed, holding that an implied contract cannot exist when there is an existing express contract covering the identical subject. Having pleaded an express contract claim, the seller could not, without obtaining a rescission, recover on a quasi-contract theory. Thus, its quasi-contract claim failed as a matter of law.

The court also dismissed the conversion claim. Under the terms of the contract, as well as under the Uniform Commercial Code, title passed to the seller upon delivery in August and September of 1997. Once the buyer had title to the scrap metal, there could be no conversion because it, not the seller, owned the scrap metal.

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